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
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.

1
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.

2
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.

3
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.

4
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

5
2. Functional diagram of the methodology

6
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

7
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.

8
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.

9
ii. Functional graph

Below is the general outline of the evaluation

10
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.

11
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

1
 <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
Points
([MWh/year]/inhabitants) *
<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 Points
(GWh/year) *
<8 1
8<R<31 2

2
 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 Points
(MWh / year) / User *
<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
Points
flow(m3/sec.)
<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
3
 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

Points
consumption (Km.)
>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

4
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

Points
networkCnet(%)
>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%

5
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

Points
the point of generation (km)
>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.

6
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.

Points Weight Result

(0 a 10) (1 a 5) 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=
Ee= TOTAL /n

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

7
 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:

Ce =  CI + ( M × CI × Vu )  ÷ ( P × h × Vu )
Ce =  CI × (1 + 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 Points

( USD/kWh)
>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

8
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- Points

off rate)
<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:

9
 • 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 Points

lifespan(% of the investment)
<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

10
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

11
(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.

Points Weight Result

(0 a 10) (1 a 5) 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
1
generation) **
TOTAL
n
Result
Emas=
Emas= TOTAL /n

** 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 Points

(tons CO2e/year)
1 1
1<e<251 2
251<e<501 3
501<e<750 4
750<e<1000 5

12
 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 (%).

E (%) = ( Egen ÷ Eevit ) × 100

• 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 Points

(%generated compared to % avoided)
>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

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 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.

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

Technical evaluationEt 5

Economic evaluation Ee 2

Environmental and social

4
evaluation Emas

TOTAL
N
Valuation Vp=TOTAL/n Vp =

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