Lahendong Medium Enthalpy Binary-Cycle Geothermal Project (Indonesia): an Ex-Ante Financial and Economic Generating Cost Comparison

Abstract

Economic analysis of a project can be divided into a micro and macro-economic analysis. In the former, the analysis is limited to the monetary costs and benefits directly attributable to the project. This type of analysis also known as a financial analysis. On the other hand, a macro-economic analysis encompasses a much larger, and often much difficult to quantify, variables which are not readily attributable(at least at the first glance) to a projectís existence.A fmancial analysis is usually used to determine a projectís feasibility when the proposed project is a (monetary) one. On the other hand, when the societyís welfare is what matter most, a macro-economic analysis is the more appropriate tool to judge a project feasibility. Such scope differences between micro and macro-economic analysis often results in, but not always, conflicting conclusions for a project. ideal project should give a similarmicro and macro-economicconclusions.

This paper tries to show how such macro-economic analysis is done to the Lahendong geothermal research project in Indonesia