Estimating ex-post ERRs when critical data inputs are unavailable is not informative. The evaluation included a requirement to conduct a cost-benefit analysis to estimate the economic rate of return of the four completed on-grid renewable energy grants one year after compact closure. However, the evaluation team was unable to collect or verify certain parameters to which the economic models were extremely sensitive. As such, a change in assumption for that parameter resulted in very different ERR estimates, in one case a formerly negative ERR moved to one that passed MCC’s 10% hurdle rate. The ERRs, therefore, were difficult to interpret and did not provide a meaningful addition to the evaluation report. In an ex-post setting with limited data, cost-benefit analysis may not provide meaningful results.
Lesson Learned