11. Conclusion
This analysis demonstrates that Project Aqua may provide an overall benefit to the economy from its contribution to the electricity sector and may lead to lower electricity prices for a period. This benefit is very sensitive to the choice of public sector discount rate (PSDR) and is heavily dependent on a range of assumptions. At low PSDRs the benefits of the project are quite large. At the traditional PSDR of 10% the benefits of Project Aqua could be relatively small and sensitivity analysis suggests that this benefit could be eliminated by an increase in the cost of Project Aqua relative to other generation options or a reduction in the value of fuel and carbon emissions savings.
Meeting growing demand for electricity from other sources than Project Aqua appears to rely on a mix of generally small cogeneration, geothermal, hydro and wind developments, supplemented by larger scale coal-fired developments. Although we consider this to be feasible, there is uncertainty surrounding the rate at which these developments could or would proceed.
Because the outcome of this analysis is very sensitive to the choice of PSDR, it may be important for government to consider, in more depth, the appropriate PSDR for analysing the costs and benefits of Project Aqua.
Back to Top