The bases for the calculation of the cost-effectiveness of the proposal are set out in the following table:

	Factor	Assumption	Basis
1	Insured capacity (MW)	1,000	Assumed terms of agreement with participating insurance companies
2	Load factor of capacity	55%	DOE projection
3	Annual green power (kWh)	4.8 billion	Calculated from 1 and 2
4	Insured capacity not needing insurance (MW)	310	See text discussion
5	Capacity added by insurance (MW)	690	Calculated from 1 and 4
6	Annual additional green power (kWh)	3.3 billion	Calculated from 5
7	Useful economic life of generating facilities	20 years	Conservative assumption for useful economic life.a
8	Additional green power in 20 years (kWh)	67 billion	Calculated from 6 and 7
9	Maximum total cost to governments	$50 million	Green power price insurance proposal
10	Maximum cost per additional green kWh	$0.0007	Calculated from 8 and 9
11	Minimum total cost to governments	$5 million	Green power price insurance proposal
12	Minimum cost per additional green kWh	$0.00007	Calculated from 8 and 11

^a The 20-year assumption in fact embodies two assumptions about the impact of the proposal: that the average economic life of the insured facilities would be at least 20 years (a conservative assumption), and that the facilities will continue to be additional capacity over the 20-year period. The issue involved in the second assumption is whether the additional capacity built as a result of the insurance program is merely “borrowed” from future construction. Suppose that capacity that would have been built in, say, six years was instead built now as a result of the availability of green power price insurance. The insurance then would add to green generating capacity but would do so only for a six-year period and not for the full economic life of the facilities. The analysis in this paper assumes that the construction is not borrowed from the future in this sense. For at least 20 years, the insurance is assumed to shift the growth of green generating capacity to a higher trend line.
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