Improving the Approach to Efficiency Assessment of Investment Projects in the Energy Sector

Abstract

According to the annual world statistics, primary energy consumption demonstrated a steady growth over the past decade but in 2018, its average value was doubled. A rapid development of energy sector will not only lead to the growth of CO2 emissions and other negative consequences, but also to more intensive use of natural resources in the immediate future. Growing pressure on resources might give rise to a number of challenges in virtually all branches of human activity. The energy sector's impact on the environment is increasing at a high speed, which necessitates the efficiency assessment of investments in energy projects applying a system of technical, economic and environmental indicators. Nowadays, most of the energy projects comprise eco-friendly technological solutions that significantly decrease the use of natural resources but at the same time they might affect financial costs that dampen the attractiveness of investment projects at all. Despite that fact, the economic and environmental evaluation allows identifying the total exposure of the project in the long term and aids in measuring its multiplier effect on the region economy as lots of energy projects have a considerable innovative potential. The present study provides a system of environmental indicators that improves the efficiency assessment process of investment projects in the energy sector.

Approaches to the Assessment of Ecological and Economic Efficiency of Investment Projects: Brief Review and Recommendations for Improvements

“…The proposed system of ecological indicators can be also adapted to the type of investment project and the branch of the economy to which this investment project belongs. An example of adaptation is given in the paper "Improving the approach to efficiency assessment of investment projects in the energy sector" [40], where indicators of the natural capital use were adapted to the energy facility.…”

A Multicriteria Decision-Making Approach in Exploring the Nexus Between Wind and Solar Energy Generation, Economic Development, Fossil Fuel Consumption, and CO2 Emissions

“…Finally, improving renewables development across US, Indian, and Chinese domains is impossible without tackling a significant impediment. Globally, the absence of economic incentives, the significant startup costs, and inadequate return on medium-term renewable energy expenditures (particularly solar) (Karaeva et al, 2020;Shahzad et al, 2021). However, Elavarasan et al (2020) found that problem of inadequate usage are two main impediments to renewable power in China, whereas the underexploited generating potential is expected to undermine hydropower and solar power implementation in the United States.…”

Screening of Factors for Assessing the Environmental and Economic Efficiency of Investment Projects in the Energy Sector

“…In addition, current approaches to the appraisal of environmental and economic efficiency do not consider the specifics of various sectors of the economy, which complicates the comparison between alternative investment projects and negatively affects the effectiveness of decisions taken at the stage of their selection [ 8 , 9 , 10 ]. It is therefore necessary to develop simplified approaches to consider the specifics of economic sectors in order to improve the effectiveness of environmental performance assessment and the possibility of visual comparison of projects by their environmental component [ 11 ].…”