Course objectives: 

The students will be able to determine the importance and the purpose of feasibility studies and cost-benefit analyses as well as distinguish terms of pre-feasibility study, feasibility study and cost-benefit analysis. They will learn how to present the steps in an investment study, show the methods for investment assessment in the energy sector and demonstrate the workflow in the project’s economic evaluation software. 

Course content:

- The importance and the purpose of feasibility studies and cost-benefit analyses: answer the question why feasibility study and cost-benefit analysis are made; Show an investment study as a part of the project cycle;

- Terms pre-feasibility study, feasibility study and cost-benefit analysis: pre-feasibility study, feasibility study and cost-benefit analysis definitions; Comparison of a feasibility study and a cost-benefit analysis; Examples of competitions where (pre)feasibility studies and cost-benefit analyses are necessary;

- Steps in an investment study: socio-economic context. Identification of the project; Feasibility and options analysis; Financial analysis – fundamental terms and financial analysis indicators, financial return on investment, financial gap, financial sustainability financial return on national equity; Economic analysis; Risk analysis;

- Methods for investment assessment in the energy sector: method of energy production cost calculation; Energy economics; Equity and expenditures; Working period and cost of equipment; Benefits and costs of a project; Evaluation of a project proposal; Average rate of return, payback period and present value method; Investment uncertainty; Depreciation; Inflation; Fixed and operational expenditures;

- Project’s economic evaluation software: review of the parameters for the calculation (fundamental cash flow calculation, production prediction, prices, taxes, operational and capital expenditures, depreciation, reserves estimation); Fiscal regimes types. Time value of money; Browsing through software options; Creating a simple case and calculating the NPV, IRR and other economic indicators.

Learning outcomes at the level of the course:

• Analyse feasibility studies and cost-benefit analysis;
• Explain the terms pre-feasibility study, feasibility study and cost-benefit analysis;
• Design a project investment study in energy sector;
• Demonstrate the steps in software;
• Evaluate the concessions and fiscal regimes for energy sources exploitation;
• Rank the projects.