Methodology

for Evaluating

Renewable

Energy Projects

Translated from original:

“Metodología de Evaluación de

Proyectos de Energía Renovable”,

2007.

Proyecto Desarrollo de Energías

Limpias en Chile

Fundación Chile – BID Fomin

September 2012

Contenido I. BACKGROUND AND CONTEXT .................................................................................................... 1

1. Introduction........................................................................................................................... 1

2. Identification of the main target areas ................................................................................. 3

i. Solar .................................................................................................................................... 3

ii. Biomass .............................................................................................................................. 4

iii. Wind energy ..................................................................................................................... 4

iv. Hydropower ...................................................................................................................... 4

II. INTRODUCTION TO THE METHODOLOGY ................................................................................. 5

1. Presentation .......................................................................................................................... 5

2. Functional diagram of the methodology ............................................................................... 6

III. EVALUATION METHODOLOGY ................................................................................................. 7

1 Eligibility stage ........................................................................................................................ 7

i. Considerations .................................................................................................................... 7

ii. Functional scheme ............................................................................................................. 7

iii. Implementation of the pre-evaluation ............................................................................. 8

2. Evaluation stage .................................................................................................................... 9

i. Considerations .................................................................................................................... 9

ii. Functional graph .............................................................................................................. 10

iii. Questionnaire evaluations.............................................................................................. 11

3. Decision matrix ........................................................................................................................ 16

1

I. BACKGROUND AND CONTEXT

1. Introduction Renewable energy sources are defined as those whose processes of transformation and development into useful energy are inexhaustible. Some of these energy sources are: hydraulic, solar, wind, and tidal. In addition to these and depending on the form of exploitation, biomass and geothermal energy are also considered renewable energy sources. Renewable energies are divided into conventional or non-conventional, depending on the degree of development of the technologies used for their exploitation and penetration in the energy markets. Among the conventional sources, the most widespread is large-scale hydraulic energy, whichinChile generates around 40% of the installed electrical power. Given their autochthonous nature and the fact that they generate significantly lower environmental impacts than conventional sources of energy, NCREs can fulfill secure supply and environmental sustainability objectives. The size of this contribution and the economic viability of their implementation depend on each country’s peculiarities, including the exploitable potential of their renewable resources, their geographical location and the characteristics of their energy markets. Historically, the Chilean energy grid has been based on conventional renewable energies, especially hydropower used for large-scale electricity generation. The participation of renewable energies in the Chilean energy grid has declined in recent years due to the growth of the transport sector and the increased use of natural gas for electricity generation. Imported fuels (mainly Argentine natural gas, single vendor), account for 55% of Chile’s electricity generation, resulting in a situation of dependence. In times of shortage, the cost of the power supply rises, dramatically affecting the country’s industrial and home users. This situation is estimated to hold until 2010 and will only be solved by introducing new energy production systems to reduce foreign dependence and improve diversification1 Renewable energy can make a very positive contribution tothis scenario, because it is endogenous and it comes from available resources. They are also clean technologies,they generate employment, andthey help to attract foreign investment and to increase technological capabilities. It is important to consider the mid-term and long-term benefits that may lead to the introduction of renewable energies into the Chilean economy.

1 Original document was written in 2007, and translated in 2012.

2

This methodological guide aims to provide an easy-to-use tool, for the analysis of renewable energy projects and as a guide to the most appropriate technologies for each type of project.

3

2. Identification of the main target areas

Identification of the most suitable geographical areas for the implementation of generation facilities based on renewable, existingresources.

i. Solar

This type of energy is used mostly in the northern part of the country, which has one of the world’s highest levels of radiation. Evaluations of the records show that northern Chile has very favorable conditions for the use of solar energy.

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ii. Biomass

Present in every region from the first to the twelfth, but mainly from regions VI to XI, where most of the industrial and agricultural activities are concentrated. Around 180 MW of electrical power are currently generated using waste from cellulose factories and animal processing,supported by fossil fuels.

iii. Wind energy

There is no exact estimate of Chile’s wind potential, because of the lack of measurement data. However, a few areas for wind energy development show potential.

• Area of Calama in the second region and, eventually, other high plains areas.

• Coastal and hilly areas in region IV and, eventually, other regions in the country’s north.

• Points penetrating intothe ocean along the northern and central coastlines.

• Sporadic Islands.

• Coastal areas open to the ocean and areas open to the Patagonian pampas in regions XI and XII. The latter have excellent wind resources.

iv. Hydropower

Several mountain ranges in nearly all the central and southern zones, areas such as continental Chiloé and isolated areas from region VIII onsouthwards are particularly suitable for the installation of small plants. According to the inventory of the country’s hydroelectric resources, the exploitable potential is estimated at about 15,000 MW, of which at least 5,000 MW are in the southern region located south of Puerto Montt.

v. Geothermal energy The National Geology and Mining Service keeps a register of thermal events in Chile, sites that may have potentially usable geothermal energy. The regions with the most potential, by number of sites identified, are:region I (23 sites, 9 in Pica), region II (13 sites, 8 in San Pedro de Atacama) and region X (25 sites).

vi. Tidal power Little is known about this energy source. There have been studies of ocean currents that flow through Chacao Channel, which separates the island of Chiloé from the continent. A generation potential of 1,200 MW has been estimated, which would more than adequately cover the island’s needs.

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II. INTRODUCTION TO THE METHODOLOGY

1. Presentation

The methodology for evaluating renewable energy projects presented below has been prepared considering Chile’s peculiarities, its energy, social, economic and environmental situations. The users lack of experience and knowledge about the different possibilities that these energies offer, theirhigher cost compared to conventional energies, and the absence of incentives or a legal framework to enable financing, hinder their implementation. However, the diversity of renewable energy developments worldwide means that previous experiences can be used to try to overcome these barriers. Other existing methodologies2 have been used to develop the methodology presented here; they have been developed in Chile as well as in countries that have more experience in the renewable energy sector, adapting experiences and results to each country’s particular case. Multi-criteria methodology consists of two evaluation phases that permit a first intuitive approach to the project and its subsequent detailed analysis. The first phase, “eligibility”, consists of a pre-evaluation which is done using a “decision filters” system. These “filters” do not quantify the result but do allow the user to assess the critical parameters that roughly determine the project’s feasibility. When the “eligibility” result is positive, a quantified project evaluation is made. This type of evaluation uses several criteria which can be summarized in three tables: "technical aspects", "economic aspects" and "environmental and social aspects". Each criterion is scored on a scale of 1 to 10, and is weighted according to its importance. The results of the three evaluation tables are summarized in the decision matrix, which determines the project’s final score. This methodology presents the more relevant criteria when assessing a project at a pre-feasibility stage and it is an effective way to evaluate them. The system can be adapted to each situation, since the initially proposed scoring and weighting scales can be modified to fit the developments in each country’s situation. 2 “Metodología de ayuda a la decisión para la electrificación rural apropiada en países en vías de desarrollo” Francisco

J. Santos Pérez. “Metodología de Formulación y evaluación de proyectos de Electrificación Rural”, 2004

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2. Functional diagram of the methodology

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III. EVALUATION METHODOLOGY

1 Eligibility stage

i. Considerations

This stage of eligibility is done intuitively, to be able to quickly discard those projects that will be revealed as necessarily non-viable. It also lets you set the starting point for the evaluation. Once successfully past these exclusion filters, the evaluation phase is carried out step by step.

ii. Functional scheme

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iii. Implementation of the pre-evaluation

(a) Evaluation of the resource and the demand At this early stage, an accurate evaluation of the resource or of the demand is not the goal, but instead to determine if there is a minimum usable resource that would make the project a feasible one. A more accurate evaluation of the resource is prepared and assessed later in the evaluation phase itself. Minimum resource limits are defined:

• For solar energy: radiation of 3,000 kcal / (m2/day)

• For wind energy: average speed per year: 5 m/s at 80 m

• For the mini hydroelectric plant: minimum flow rate of 0.1 m3/sec.

• For biomass and geothermal: considerations are more subjective, there are no set limits.

The evaluation of the demand is pertinent for isolated installations. How well the demand from the users fits the installation’s expected power generation is evaluated intuitively. In the case of facilities connected toa grid, the demand is infinite; the limiting factor is the electricity grid’s evacuation capability. For isolated applications, a resource of up to 20% less than the demand will be considered acceptable, bearing in mind the possibility that the installation can be complemented with non-renewable technologies (hybrid system).

(b) Evaluation of the power/distance to grid ratio Evaluated only for electricity production installations. It is the relationship between the expected power (MW) and the distance to a point of connection to the grid (km). For installations that are connected to a grid, this ratio should be greater than 1. For isolated installations, this ratio should be less than 0.01. (c) Technological availability For this decision filter, an estimate has to made as to whether the technology referred to in the project is technologically advanced enough and if there is sufficient expertise to ensure its proper installation and operation.

(d) Legal impediment Bigger obstacles to the installation are considered here, such as, an environmentally protected area.

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2. Evaluation stage

i. Considerations

• The evaluation methodology uses three different questionnaires: o A technical questionnaire o An economic questionnaire o An environmental and social evaluation questionnaire

• In order to obtain an evaluation, all the criteria must be met by quantifying their value in the corresponding boxes for each questionnaire.

• In each questionnaire, n is the sum of the weights for the criteria being evaluated.

• Each questionnaire has a resulting number of 0 to 10. o This value is called the Et for the technical questionnaire o This value is called Ee for the economic questionnaire o This value is called the Emasfor the environmental and social assessment

questionnaire

• The decision matrix has these three values Et, Ee, and Emas as input data. The matrix weighs the results obtained in each questionnaire to yield an overall evaluation of the project.

• The decision matrix produces an overall evaluation of the project. Nevertheless, the questionnaires are independent from each other, so they can be used separately to obtain, for example, just the technical assessment. In this case, the decision matrix is not used.

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ii. Functional graph

Below is the general outline of the evaluation

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iii. Questionnaire evaluations

Note: Due to the wide range of installations referred to in this methodological approach, certain scoring scales are not linear. In these cases, score segmentation of quantification criteria has been used to accurately evaluate the values under consideration. This ensures comparisons between renewable energy installations which otherwise would not make sense given the disparity of orders of magnitude of their different representative parameters.

(a) Evaluation of the technical questionnaire.

The technical criteria evaluation questionnaire covers a selection of key parameters to consider when evaluating a project involving the introduction of renewable energies. There are two types of criteria:

• The common criteria, which apply indistinctly to all projects in the pre-feasibility stage, regardless of the type of energy produced or of the renewable source being considered.

• Specific criteria applicable to each specific technology. It should be noted that this distinction between specific and common criteria does not carry any hierarchical distinction. The technical evaluation should include specific criteria for each technology. When filling out the questionnaire, fill just the column fields for the project under consideration. The following is the technical evaluation table, followed by the scoring instructions for each criterion.

1

1

• Common criteria

� Energy production This criterion is evaluated considering the energy produced by the installation over a year with a standard operation measured in MWh.

Energy production (MWh/year) Points

< 251 1

251<P<500 2

501<P<750 3 750<P<1,000 4

1,000<P<100,800 5

100,800<P<200,600 6

200,600<P<300,400 7

300,400<P<400,200 8 400,200<500,000 9

>500,000 10

� Available resource To score the available resource, the key factors that determine each source’s resource will be evaluated.

Wind resource Wind resource is scored according to the equivalent annual hours of operation (AHO).

Wind resource available (WRA) Points

<1.800 1

1800<WRA<1975 2 1975<WRA<2150 3

2150<WRA<2325 4

2325<WRA<2500 5

2500<WRA<2600 6

2600<WRA<2700 7

2700<WRA<2800 8 2800<WRA<2900 9

> 3000 10

Solar resource The solar resource is evaluated with reference tothe average solar radiation in the location where the project will be implemented, in kcal/m2/day.

Solar radiation (kcal/m2 day) Points

2

<2,900 1

2,900<R<3,050 2 3,050<R<3,200 3

3,200<R<3,350 4

3,350<R<3,500 5

3,500<R<3,711 6 3,711<R<3,922 7

3,922<R<4,132 8

4,132<R<4,343 9

>4,343 10

Biomass Resource For the biomass resource assessment, four different scales may be used, depending on the origin and how it is used.

District Heating ([MWh/year]/inhabitants) *

Points

< 3 1

3<R<4.1 2

4.1<R<5.3 3

5.3<R<6.4 4 6.4<R<7.5 5

7.5<R<12 6

12<R<16.5 7

16.5<R<21 8

21<R<25.5 9 >25.5 10

** The available and accessible resource within a radius of 25 Km is quantified in (MWh/year) per inhabitant in the district.

EDAR & RSUBiogas (Inhabitants) Points <20,000 1

20,000<Pop<82.500 2

82,500<Pop<116,250 3

116,250<Pop<150,000 4 150,000<Pop<320,000 5

320,000<Pop<490,000 6

490,000<Pop<660,000 7

660,000<Pop<830,000 8

830,000<Pop<1,000,000 9 >1,000,000 10

Biomass electrical generation / cogeneration – Available energy

(GWh/year) * Points

<8 1 8<R<31 2

3

31<R<54 3

54<R<77 4 77<R<100 5

100<R<160 6

160<R<220 7

220<R<280 8 280<R<340 9

>340 10 ** The available and accessible resource within a radius of 25 Km is quantified in (MWh/year) per inhabitant in the district.

Domestic biomass / micro cogeneration – Available energy

(MWh / year) / User * Points

<2 1 2<R<3 2

3<R<3.5 3 3.5<R<4 4 4<R<5.2 5

5.2<R<6.4 6 6.4<R<7.6 7

7.6<R<8.8 8

8.8<R<10 9 >10 10

The available and accessible resource within a radius of 25 Km is quantified in

(MWh/year) per house.

Hydraulic resource (For Mini-hydroelectric plant)

Mini-hydroelec. – Volume of flow(m3/sec.)

Points

<0.2 1

0.2<c<0.3 2 0.3<c<0.4 3

0.4<c<0.5 4 0.5<c<3.4 5 3.4<c<6.3 6

6.3<c<9.2 7 9.2<c<12 8

12<c<15 9

>15 10

Geothermal resource

Geothermal(Availability*) Points

4

1 1

2 2 3 3

4 4

5 5

6 6 7 7

8 8

9 9

10 10 **Expert evaluation is needed for the rock temperature and the availability of meteoticfluid as well as the possibility of exploiting hot dry rock by means of previous hydraulic fracturing with a guarantee of protection against earthquakes. This is evaluation is a highly complex one.

Distributed generation

The following scale, which uses the installation’s distance from the point of consumption as a parameter, will be used to score the distributed generation,

Distance to the point of consumption (Km.)

Points

>200 1 160<d<200 2 120<d<160 3

85<d<120 4 45<d<85 5

8<d<45 6

6<d<8 7

3<d<6 8

0.1<d<3 9 < 0.1 10

Industrial network The density of the industrial network is an important point to consider since it reflects the availability of maintenance and associated services. This evaluation criterion is subjective, so employing a full scale of 1 to 10 would not be very useful. In this methodology, the evaluation will be carried out according to three density levels: low, medium and high.

Industrial network density Points

Low 1

Medium 5 High 10

• Specific criteria. Absorption capacity of the network

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To rate the network´s absorption capacity, the following ratio will be evaluated. Pinst = installed power (MW) Pevac = evacuation power (MW)

Absorption capacity of the networkCnet(%)

Points

>99 1 96<Cnet<99 2

92<Cnet<96 3 89<Cnet<92 4

85<Cnet<89 5 78<Crnet<85 6 71<Cnet<78 7 64<Cnet<71 8 57<Cnet<64 9

<50 10

Adaptation of the demand for the isolated system The deviation (d) between the power that willbe installed and the optimal power that is needed given the demand has to be calculated in order to evaluate how the demand adapts to the system of isolated generation. Popt = optimum power that adapts best to demand ** (MW) Pinst = installed power (MW)

Deviation d(%) Points

>20 1

16<d<18 2 14<d<16 3

12<d<14 4

10<d<12 5

8<d<10 6

5<d<8 7 3<d<5 8

0<d<3 9

0 10

** The optimal power that best fits the demand depends on the installed generation technology. For example: the optimal power for thermal solar energy would be 30% lower than the demand, with the deficit covered by conventional energies. Meanwhile, in a photovoltaic or wind isolated system, optimal power would be 20% greater than the demand, so the excess production can accumulate for use during times of low generation. ** For the calculation of the optimal power “Popt”, the following percentage increments above the value of the demand are proposed: photovoltaic = + 30%; Solar thermal = - 30%; Biomass = + 10%; Mini hydroelectric = 0%; Wind = + 20%; Geothermal = 0%

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Diffusion resource Here the density of the resource in km²/MWh/year is scored. This approach is particularly important for biomass projects. Resource density (MWh/km²/year) Points

<2.5 1

2.5<dens.<4.5 2 4.5<dens.<6.5 3

6.5<dens.<8 4 8<dens.<10 5

10<dens.<12 6

12<dens.<14 7 14<dens.<16 8

16<dens.<18 9 >18 10

Distance of the resource from the point of generation

Distance of the resource from the point of generation (km)

Points

>50 1 45<d<50 2

40<d<45 3

35<d<40 4 30<d<35 5

25<d<30 6 19<d<25 7

13<d<19 8

7<d<13 9 <7 10

Land access Land access is a subjective criterion. Therefore, in this methodology, the terrain is classified into three types: rugged, hilly or flat.

Terrain Points Rugged 1

Hilly 5 Flat 10

(b) Evaluation of the economic questionnaire

The economic evaluation questionnaire is common for all kinds of projects.

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It includes general investment evaluation criteria and also specific criteria that are important when evaluating the economic viability of a generation installation using renewable resources. The criteria presented here have been selected for their relevance and for the ease with which they can be extracted from the project’s key data. However, it is important to consider the mid and long term economic benefits that the introduction of renewable generation assets has for the energy sector, in particular, and for the country’s global economy.

Initial investment The following table is used to score the initial cost of installation. This table assigns points based on the average cost estimated per kW of installed power used. The weight of this criterion is relatively low considering that it does not objectively evaluate the project’s economic situation. This must be evaluated and weighed according to the economic barrier that could arise from the investment, depending on the existing investor’s capacity.

Estimated price (USD per kW) Points >10,000 1

9,000<p<10,000 2 8,000<p<9,000 3

Points (0 a 10)

Weight (1 a 5)

Result Points * weight

Initial cost 1

Cost of kWh produced 5

IRR 4

NPV at the end of the lifespan 2

Payback, (years) 3

TOTAL

n

Result Ee= TOTAL /n

Ee=

8

7,000<p<8,000 4 6,000<p<7,000 5 5,000<p<6,000 6 4,000<p<5,000 7 3,000<p<4,000 8 2,000<p<3,000 9

< 2,000 10

Cost of the energy produced. This criterion is extremely important since it concerns the cost per unit relationship produced during the installation’s lifetime. The costs for different technologies can be globally compared to the energy produced and the price for each kWh. The maintenance cost remains constant throughout the lifetime of the installation, since the aim is to compare the relative cost of different technologies; but it should be noted that the maintenance cost usually goes up in the final years of the period. The cost of the energy produced expressed in USD per kWh is obtained as follows:

( ) ( )

( ) ( )1

Ce CI M CI Vu P h Vu

Ce CI M Vu P h Vu

= + × × ÷ × ×

= × + × ÷ × ×

Ce = cost of energy produced (USD/kWh) CI = initial cost of installation (in USD) M = cost of maintenance (in CI % per year) Vu = useful life (years) installation P = installed power (kW) h = hours of operation per year

Some typical cases studied for each technology, as well as reference costs for kWh produced, are attached. These data can serve as an alternative to approximate the evaluation in case all the input data needed to evaluate the cost of the energy produced by the installation is not available. This cost shall be scored on the evaluation questionnaire according to the following table:

Cost of the energy produced ( USD/kWh)

Points

>0.30 1 0.24<c<0.27 2 0.22<c<0.24 3 0.19<c<0.22 4 0.16<c<0.19 5 0.13<c<0.16 6 0.11<c<0.13 7 0.08<c<0.11 8 0.05<c<0.08 9

<0.05 10

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Internal rate of return (IRR)

• Rate that cancels out the NPV (NPV = 0) at the end of the lifespan

• Considers all the project’s cash flows

• Considers cash flows that have been properly discounted

• There may be more than one IRR for each project, depending on the behavior of the cash flows

• There will be a single IRR for a project when it behaves appropriately, that is when the cash flows have one sign change

• Profitability is measured in percentages

• The IRR is not used to compare two mutually exclusive projects that are of a different scale ("which is the best project of the two")

Normally, there is a decision rule: accept projects when the IRR> r, where r is the previously defined cut-off rate. In most cases, the cut-off rate is equal to the rate of return on the state’s public debt. In this methodology, projects with an IRR< r will receive a 0 score. If the IRR is greater than or equal to the cut-off rate, the score for the IRR will be a function of its difference with that cut-off rate, according to the following table:

IRR (points above the defined cut-off rate)

Points

<1 1 1<t<2 2 2<t<3 3 3<t<4 4 4<t<5 5

5<t<6 6 6<t<7 7

7<t<8 8 8<t<9 9 >10 10

Net Present Value (NPV)

• The Net Present Value is obtained by adding up the investment project’s updated funding flows.

• It measures the wealth that the project brings in measured in the value of the currency at the time the project started.

• The discount rate is used to update the cash flows.

• There is a single NPV for each project

• All the projects cash flows are included.

• Properly discounted cash flows are included.

• Profitability is measured in monetary terms. In this methodology the NPV is considered at the end of the installation’s useful life. Usually there is a decision rule that is as follows:

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• Accept projects with NPV> 0

• Reject projects with NPV< 0 In our methodology, if the project has a negative NPV, it will receive a score of 0.

If the NPV is positive or zero, the value of the NPV will be scored on the table at the

end of the installation’s useful life, as a percentage of the value of the initial investment.

NPV at the end of the installation’s lifespan(% of the investment)

Points

<10 1 10<NPV<20 2 20<NPV<30 3

30<NPV<40 4 40<NPV<50 5

50<NPV<60 6 60<NPV<70 7 70<NPV<80 8 80<NPV<90 9

>100 10

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Payback period (PBP)

• The PBP is the period of time requiredfor the return on an investment to repay the sum of the original investment.

• It measures profitability in terms of time.

• It does not include all the project’s cash flows, since it ignores those occurring after the investment’s payback period.

• It does not allow alternative projects to be ranked. It is scored as shown in the following table:

PBP (years) Points >11 1

10<PBP<11 2 9<PBP<10 3

8<PBP<9 4 7<PBP<8 5

6<PBP<7 6 5<PBP<6 7 4<PBP<5 8

3<PBP<4 9 <3 10

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(c) Evaluation of the environmental and social questionnaire

This questionnaire includes criteria that assess the project’s impact on how it integrates both the natural and the human environment.

** This last criterion is evaluated only for installations not connected to the electricity grid.

� CO2 emissions avoided CO2 emissions are assessed according to the equivalent tons of carbon dioxide (CO2etons) that are avoided by replacing the conventional source with the renewable one. CDM projects must offer “something extra” which involves demonstrating that their emissions are below those of the reference baseline. Attached is a calculation method for obtaining the project’s CO2 emissions. Below is the scoring scale for assessing the CO2emissions avoided by using this methodology.

Avoided emissions of CO2 (tons CO2e/year)

Points

1 1

1<e<251 2 251<e<501 3

501<e<750 4 750<e<1000 5

Points (0 a 10)

Weight (1 a 5)

Result Points * weight

CO2emissions avoided in relation to the baseline 5

Ecopoints (ACV)

5

Landscape conditions

4

Lifestyle alterations

2

Development of local economic activities

3

Development of local employment

4

Increase in users’ comfort/satisfaction (isolated generation) **

1

TOTAL

n Result Emas= TOTAL /n

Emas=

13

1.000<e<30.800 6 30.800<e<60.600 7 60.600<e<90.400 8

90.400<e<120.200 9 120.200<e<150.000 10

� Ecopoints (LCA) Impact ecopoints are units designed to measure the environmental impact of electricity generation systems throughout their life cycles. The study concludes by giving each one of the technologies studied a total value of environmental impact ecopoints per Terajoule of electricity produced. A Terajoule equals 278 Megawatt hours (MWh). Ecopoints are units of environmental penalty,so that the more ecopointsa big electricity generation system obtains, the greater its environmental impact, and inversely, those systems with less Ecopoints will be more environmentally friendly. Life cycle assessment (LCA) is an internationally recognized environmental management tool (ISO 14.040), which is used to identify the environmental impacts of a product, process or activity from “cradle to grave”, that is, throughout all the phases of its life cycle, from the extraction of the raw materials needed for its production down to its final handling as a waste product. This methodology has been used to estimate the environmental impacts of different electricity generation technologies enabling the quantification and, thus, the quantitative comparison, of the project installation’s environmental impacts with conventional installations. A complete methodology for calculating the Ecopoints is presented in the Appendix, together with case studies. Once the Ecopoints generated by the project have been calculated together with the avoided Ecopoints, the relationship between these two values will be calculated E (%).

( )(%) 100E Egen Eevit= ÷ ×

• Egen= Ecopoints generated by the project • Eevit=Ecopoints avoided by the Project

The value of E (%) is used for the score of the Ecopoints in the methodology according to the scale presented in the following table: Results of the evaluation of ecopoints (%generated compared to % avoided)

Points

>50 1 39.7<E<50 2

29.5<E<39.7 3 19.2<E<29.5 4

9<E<29.5 5 7.4<E<9 6

5.8<E<7.4 7 4.2<E<5.8 8 2.6<E<4.2 9

<2.6 10

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� The remaining criteria These evaluation criteria are subjective, so a prior evaluation is suggested with intermediate criteria that allow the user to score them more accurately. The intermediate criteria will have a 1 or a 2 value. This prior evaluation will result in a number called I, which will be used for the score range of each of the criteria. I will always have a value between 5 and 10, and it will be evaluated as positive or negative depending on the approach being used, as presented below.

Intermediatepoints

1 2

Immediacy Direct Indirect Accumulation Cumulative Simple Persistence Permanent Temporary Reversibility Irreversible Reversible Continuity Continuous Notcontinuous

• Landscape conditions

I Points

5 1 6 2 7 4

8 6 9 8

10 10

• Lifestyle alterations

I Points

5 1 6 2 7 4 8 6 9 8

10 10

• Development of local economic activities

I Points

10 1 9 2 8 4

15

7 6 6 8 5 10

• Development of local employment

I Points

10 1 9 2 8 4 7 6 6 8 5 10

• Increase in users’ comfort/satisfaction

I Points

10 1

9 2 8 4 7 6 6 8 5 10

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3. Decision matrix The decision matrix enables an overall assessment of the project based on the evaluation of the three previously detailed questionnaires. The result of the project evaluation is referred to as Vp , and it has a value of 0 to 10. The input data for the matrix are the evaluation values from the three questionnaires: Et, Ee and Emas. The more heavily weighted factors show how important the project evaluation’s different elements are and they allow the methodology to be adapted to different strategic considerations that can lead to the installation of renewable energy systems.

Criteria Value (0 to 10) Weight (0 to 5) Result Points* weight

Technical evaluationEt

5

Economic evaluation Ee

2

Environmental and social evaluation Emas

4

TOTAL

N

Valuation Vp=TOTAL/n

Vp =