Abstract
In a decision-making process – such as the one about national energy strategy – an economic assessment of alternative energy systems should account for social costs of electricity (and heat) production. This encompasses both private costs of the producer(s) as well as external costs, which are primarily associated with health and environmental impacts.
Because the risks are not fully reflected in the prices of electricity, the application of alternative approaches is needed for monetary valuation of externalities. In this respect, ExternE is currently the most worked-out approach, which is already more than 20 years used and developed in the research projects for the European Commission.
Fact that ExternE treats the analysis of externalities from bottom to up (bottom-up approach), makes possible to quantify marginal impacts of different energy facilities using different fuel types, in a particular place and time. At the same time ExternE enables to structure external costs estimates by type of the impact on health risks, loss of agricultural production and biodiversity, corrosion of materials and damage associated with climate change.