Consultation on the Methodology for a smart-grid PCI cost-benefit analysis

currENT believes that the methodology for analysing the costs and benefits of PCIs is generally sound.
However, there are several ways in which the methodology does not fully capture the value of new and
innovative technologies.

This first of all concerns the time horizon for which the BAU and the SEG scenarios are considered. Many
fast-acting solutions can increase the capacity of the grid already within the next 1-2 years. However, if the
CBA is calculated 5 years in the future, this does not capture the full value of solutions that can deliver
benefits much more quickly. It also requires certain assumptions to be made about the BAU scenario, about
which projects will have been completed before the starting point of the CBA. However, this does not factor
in the cost of delays. For example, a fast-acting solutions could bring even more benefits if large
infrastructure projects are delayed.

In addition, to not being able to show the years of additional benefit a quicker to deliver solution would
provide in the intervening years a second issue arise as to the speed of construction of a solution. Typically
for projects with a greater environmental impact, either due to their size, or make up take longer to plan and
construct. However, spending must start many years before a project is built. Smaller or less environmentally
impactful projects quicker solutions avoid this and can be delivered as quickly as 1- 2 years rather than 10
years or more. If the profile of costs of the years of construction is not included in a CBA then the true CBA
of a project is impacted and distorted. An unbiased assessment between projects therefore needs to reflect
spend over the project and not just the final figure in its methodology.

Lastly, the CBA methodology does not capture the value of technologies that can be redeployed elsewhere
or that can be rescaled or developed to manage unforeseen changes to future scenario[s].

Read the full consultation here