Feedback on ENTSO-E’s Methodology for an Energy System-wide CBA

Overall, currENT commends ENTSO-E on the good metrics that have been developed for the TYNDP CBA Guidelines 4.0, while acknowledging the complexities of developing a methodology that takes all factors into account. However, there are still two main areas in which this methodology does not meet the needs of currENT members.

First of all, the benefits of solutions that can be delivered in the next 1-2 years. Using a scenario 5 years in the future as a basis for a CBA is not adequate for fast-acting solutions. This is because it does not take into consideration the benefits that can be delivered before the given year of the scenario. In all likelihood congestion will be higher in earlier years, while awaiting traditional solutions to be developed, and the value provided in these earlier years much greater. At the same time, given past experience (e.g. ACERs appraisal report on PCI progress and development) the scenarios are likely to be overly optimistic about the completion of projects by the given year, and do not sufficiently factor in the likelihood of delays. Given this uncertainty, the methodology needs to find a way to compensate for the inherent lack of information when dealing with future scenarios. For example, if there is no information on the early years 0-5, this will negatively distort the NPV overall. 

Secondly, the methodology does not fully take into consideration the challenges of a fully decarbonised European economy in 2050, and therefore does not give enough weight to innovative grid technologies that can address these challenges. At the end of January 2023, Member States have submitted their offshore development plans for each sea basin. From these plans, it logically follows that continuing with only existing technologies would result in an excessive amount of landing points by 2040, and new technologies will be needed. At the same time, it will be a challenge to access all the raw materials for this kind of grid expansion. This scarcity of raw materials needs to be factored into the CBA methodology and their impact on lead-time for development[s]. For example, meeting the capacity needs with existing cable/line solutions will require a multiplicity of circuits and materials that is likely to be unsustainable, socially acceptable or that be timely delivered.     

currENT recommends that the CBA should have overall more flexibility to deal with new technologies, so they can be fairly assessed against conventional technologies.

Read our full consulation response here.