Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two) (2007) / Chapter Skim
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Appendix F Guidance on Prospective Benefits Evaluation
Appendix F Guidance on Prospective Benefits Evaluation
Pages 95-106
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From page 95... ...
The methodology calls impact on the environment of providing a given amount of for the use of a decision tree as a framework for organizing energy service, for example by reducing the sulfur dioxide the benefits calculation, which is then presented in a results emissions per kilowatt-hour of electric energy generated by matrix that uniformly summarizes important data and esti a fossil fuel fired power plant, or because the technology mated benefits for all technology programs. indirectly enables the achievement of enhanced environ mental standards, for example by introducing the choice of The resulTs maTriX a high-efficiency refrigerator.
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From page 96... ...
The use of a common set of pend on the cost of electricity, which in turn depends on scenarios across program evaluations will allow reviewers the costs of fuels like natural gas and coal used to generate to consider many programs without having to learn definielectricity. Similarly, the economic benefits associated with tions for multiple scenarios and will facilitate comparisons
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From page 97... ...
For example, the oil benefit does not change, the scenarios should be considered price in 2012 in this scenario is $33.41 versus $23.98 in the and expected benefits reported, because at some point reReference Case, and the natural gas price in 2012 is $4.53 viewers may combine benefits across projects or programs per Mcf versus $3.92 per Mcf in the Reference Case. for a particular scenario, and the absence of an estimate for 3.
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From page 98... ...
However, to determine little benefit unless the various technologies for hydrogen vethe net benefits of the government support, it is necessary hicles -- particularly fuel cells and onboard storage -- were to to consider the extent to which this or other research teams advance enough that many people would choose to purchase are likely to have achieved the same technology advance hydrogen fuel cell vehicles; thus it is necessary to assess the absent the government support and to estimate the benefit probabilities that these complementary technologies will be and probability of the advance. The expected net benefit of successful in order to accurately estimate the net benefits the government program is the difference between the ex- of the government program to advance the technology of hydrogen fueling stations.3 pected benefits with and without government support, not the expected benefit of the technology advance with government In some cases, the benefits of a program are greatly support.
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From page 99... ...
represents the multiple factors that determine decision Tree market acceptance, including developments in the next-best Estimating benefits requires the application of a decision technology and the success of enabling and complementary tree process that includes consideration of the three key technology programs. Government Funding Technology Market Acceptance Decision Outcome High Acceptance High Success Low Acceptance High Acceptance Yes Medium Success Low Acceptance No Success High Acceptance High Success Low Acceptance No (next-best High Acceptance technology)
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From page 100... ...
150 lpw .05 .005 $4,803 $24 150 lpw 100 lpw .5 .05 $4,926 $246 Expected Cost Reductions Prob: .1 $3,136 No change .45 .045 $4,926 $222 150 lpw .05 .025 $4,680 $117 Yes 100 lpw 100 lpw .5 .25 $3,602 $901 Prob: .5 No change .45 .225 $3,695 $831 150 lpw .05 .02 $4,680 $94 No Change 100 lpw .5 .2 $3,510 $702 Prob: .4 No change .45 .18 $0 $0 150 lpw 0 0 $4,803 $0 150 lpw 100 lpw .5 0 $4,926 $0 Prob: 0 No change .5 0 $4,926 $0 150 lpw 0 0 $4,680 $0 No 100 lpw 100 lpw .5 .15 $3,602 $540 Prob: .3 No change .5 .15 $3,695 $554 Expected Cost Reductions $2,323 150 lpw 0 0 $4,680 $0 No Change 100 lpw .5 .35 $3,510 $1,229 Prob: .7 No change .5 .35 $0 $0 Expected Net Benefit from DOE Investment (million $) 813 FIGURE F-3 Example of decision tree applied to advanced lighting program.
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From page 101... ...
The only benefits associated with the without-govment -- $3,136 million -- and the benefits absent DOE invest- ernment-program branch are those attributable to the nextment -- $2,323 million -- is the expected value of the gain best technology available when the government program resulting from DOE investment. This difference of $813 would have been completed.
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From page 102... ...
To calculate benefits one must therefore consider risk associated with achieving technical or market success, the likelihood that the program will be successful. While this is captured in the comparative probabilities assigned technical success can be viewed in relation to achievement of to the with- and without-government-program branches of a single goal or outcome, a given research program might be the tree in the technical and/or market risk decision nodes.
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From page 103... ...
These factors do not apply to all programs, and it is recommended that the chief Market risk factors are often critical to evaluating the factors that influenced the probability estimates be identi- potential of an R&D program. Indeed, for investments in fied in either a row at the top of the results matrix or in an fairly specific technologies, the risks associated with market appendix.
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From page 104... ...
Global Scenario Reference High Oil and Carbon Case Gas Prices Constrained Technical Risk Program Risks Market Risks Economic Benefits Expected Program Environmental Benefits Benefits Security Benefits F-4a FIGURE F-4 Template for presenting panel results.
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From page 105... ...
Market Risk: 5 to 10 lines e.g., note factors that might affect market acceptance, including customer preferences, pricing, competitive domestic and foreign activities; next-best technologies issues, regulatory concerns, and so on. Benefits: 5 to 10 lines e.g., discuss specifically the estimation of benefits, uses and interpretations, caveats, outstanding issues, and so on.
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From page 106... ...
to the many possible outcomes. The quantitative estimates of In addition, panels must prepare a brief report -- about probability are recorded in the decision tree, as discussed in 10 pages -- to include background, summary of the DOE Appendix F, whereas the results matrix should be annotated program, technical and market risk assessment, results and with a discussion of the key factors that contribute to the discussion, technical and market success, benefits estima- technical and market risk.
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