The business case analysis of ERTMS deployment across the CNC
As part of its work, the Deployment Management Team is tasked to perform economic analyses of ERTMS deployment along the 9 Core Network Corridors investigating the related costs and estimating the benefits which the technology can bring to the European rail sector as a whole. Firstly, a business case analysis on the installation of ERTMS on the 9 Core Corridors has been performed and a first version of the analysis has been presented at the TEN-T Days on 20 June 2016 in Rotterdam. The work has started by focusing on the Rhine-Alpine and North Sea-Med Core Corridors first and then extended to the other 7 Corridors. As a result, deploying ERTMS generates a positive internal rate of return from an overall railway system perspective on each of the Core Corridors and for Europe as whole. The business case has been developed in order to:
- Fill-in the knowledge gap with an economic analysis taking into account the European railway system as whole with a corridor approach, beyond the existing national analyses
- Analyse the economic benefits of a coordinated ERTMS deployment in line with the Breakthrough Programme and the European Deployment Plan in order to ensure also a better planning of financial resources
- Provide a robust economic evaluation of a major and long-term investment programme available to the Commission, the Member States and the rail industry
The business case analysis is based on some key concepts:
- A Core Network Corridor (CNC) level analysis, the business case is based on benefits and costs at CNC level. The outcome may then differ from a pure Member State’s perspective.
- A railway system perspective, where costs and benefits are considered from a sector-integrated point of view, overall track-side deployment and vehicles’ fleets equipment, and not at the level of individual types of stakeholders (RUs, IMs, suppliers, Member States)
- A differential approach, comparing situations “without ERTMS” and “with ERTMS” analysed in the 3 different scenarios of estimates and ERTMS deployment from the year 2016 to the year 2045:
- S1 Conservative scenario, the base case where assumptions and estimates are used as provided by stakeholders’ inputs and current practice/experience with ERTMS deployment investments
- S2 Ambitious scenario, the target case where some new assumptions are included and where the S1 one are considered more favourably based on the expected positive effects of the Breakthrough Programme and expectations of the stakeholders
- S3 Fully interoperable L2 network scenario, where the effect of a full track-side deployment of only ERTMS Level 2 is tested compared to the S2 scenario.
- Multiple discussions with rail industry stakeholders, where through individual interviews, meetings at the sector’s associations, targeted consultations and workshops, data and information have been collected, analysed, discussed, fine-tuned and validated for the business case analysis and the underlining calculator.
While keeping its key assumptions and concepts, the business case analysis will continue to be evolve and be updated in the years to come, through additional interactions with the industry stakeholders. For example, following a public workshop on 20 October 2016 held in Brussels, a new loop of data collection and adjustments of the Scenarios’ assumptions has been performed.
For example, up to early 2017, the first version of the business case analysis is being updated considering:
- New national estimates of ERTMS track-side deployment costs made available to the DMT
- New inputs on the obsolescence state of national legacy systems and their scrap value
- A quicker ramp up curve of ERTMS on-board deployment between 2018 and 2027
- New inputs on upgrade costs of ERTMS on-board equipment across different ERTMS Baselines
- Corrections of some data on ERTMS track-side deployment on different rail network sections available in the TENtec database and update of other data/information
Inputs and exchanges with rail stakeholders continue remain a valuable source for the accuracy, robustness and usefulness of the business case analysis.
- Business case visuals
- Slides 20 October 2016 workshop following a new data collection loop
- Slides TEN-T Days 22 June 2016 – Rotterdam
- Slides 28 April 2016 workshop at the EC on RALP and NSM
Public sources also considered during the business case analysis:
- SDG study
- Social CBA by the Dutch Gov in EN
- Tech maturity of ERTMS on the readiness
- Train protection – review
Through the instrument Connecting Europe Facility (CEF) for Transport the EU puts at disposal of Member States, local governments, RUs and IMs grants to support the deployment of ERTMS along the Corridors. Stakeholders can apply for funding through competitive calls administered by the INEA Executive Agency.
ERTMS Innovative financing
In order to accelerate deployment and provide a larger scope of financial support, the Commission is investigating and testing new innovative ways to finance ERTMS also by blending EU resources with private financing. A new dedicated CEF blending call is now open also for ERTMS blended financing.