ABSTRACT
This chapter presents the different approaches for examining and evaluating the acceptability of investments in renewable energy projects. It also presents the procedures to carry out the different financial evaluations, their applications and limitations. In the comparison of projects or the determination of the financial viability of a particular project, one must reduce the time stream of costs and benefits to a single number by computing the net present value (npv) of a project. The true opportunity costs of a government project must be considered in a project financial evaluation. Cost inflation is the result of real cost increase to produce goods and services; that is, more inputs in terms of labour and capital are needed to produce a given amount of goods and services. Actuarial approaches to estimating service life involve construction of frequency curves, survivor curves and probable-life curves.
