1. Dr. Steffen Gackstatter Arthur D. Little, Inc. Acorn Park Cambridge, Massachusetts 02140-2390 U.S.A. Internet: www.arthurdlittle.com Reference: 73069 Using Estimates of Benefits in R&D Program Planning and Evaluation Conference on Estimating the Benefits of Government- Sponsored Energy R&D Washington, DC March 5, 2002

2. 1 sga/panel speech 030502.ppt Using Estimates of Benefits in R&D Program Planning and Evaluation Background A key question at the end of this workshop is how to use the discussed benefit estimates in R&D program planning and evaluation. Key QuestionsPossible Answers How can benefits without government be estimated (baseline)? 1Regression analysis Expert opinions Technology roadmap What extreme scenarios should be considered? 2Industry aligned with benefits due to regulations or consumer pressure Controversial benefits prioritized due to regression How can benefits with government influence be estimated? 3Ask industry for impact Build ratio of DOE/industry investment What kind of improvements are possible? 4Shorter development time of beneficial technologies Better technology results New/different technology developments made possible How can benefit estimates be used? 5Integration with GPRA Planning and evaluation DOE Targeted Benefits 1 2002Time 1 4 Improvements Scenarios 2 3 Without Government Negative Benefits Scenario With Government 1 See strategic program (e.g., energy savings, reduced emissions, power reliability, economics) Illustrative Day 1 Day 2 Baseline Positive Benefits Scenario

3. 2 sga/panel speech 030502.ppt Benefit estimates can have a major influence on the DOE program planning and evaluation process. Benefit estimates… Validate vision and strategic objectives Measure the value of single projects and combined project portfolios Create transparency regarding the success of DOE programs Demonstrate credibility of programs (internally and externally) Be integrated in GPRA, which is currently focused on: –energy savings –emissions reductions Estimated Benefits Strategic Plan (3/5 Years) Portfolio Plan & Project Selection (Continuous) GPRA Evaluation (Annual) Illustrative Using Estimates of Benefits in R&D Program Planning and Evaluation DOE Process

4. 3 sga/panel speech 030502.ppt Current Reality Driving Forces Global Supply Disruption Environmental Technology- based High Growth Tightening Fuels Markets Plentiful Low Cost Energy Economic Stagnation Future Characteristics The future environment impacting energy will not likely be “business as usual” Driving forces will determine the future scenario depending on their impact and uncertainty In each scenario the value of the estimated benefits will vary depending on the priorities of energy related politics The value of estimated benefits for planning and evaluation purposes is significantly impacted by the development of the energy environment. Using Estimates of Benefits in R&D Program Planning and Evaluation Scenarios

5. 4 sga/panel speech 030502.ppt From a portfolio perspective it is important to think broader than just about benefit estimates. Guiding Principles Impact Criteria Energy Savings Emissions Reductions Infrastructure Benefits Other Benefits DiversityDollars per Program R&D versus Deployment RiskTechnical Risk Commercial Risk TimeShort-Term versus Long-Term Using Estimates of Benefits in R&D Program Planning and Evaluation Portfolio Issues Benefit Estimates Other Portfolio Issues