The role and economic viability of different kinds of power plants involves highly interdependent value propositions because decisions affecting installed capacity of one type of power plant affects the break-even cost of production for many if not all of the others.
This primer to optimizing the system average (levelized) cost of electricity production is divided into two segments.
Part I (today) suggests that most of our electricity generators fall into one or both of two general categories, serving two basic roles or “essential market segments.” A third type is also defined and discussed. The post suggests an importance of optimizing the utilization rate of both existing and new generating resources, and that the amount of such importance corresponds to the extent and duration a resource has fixed costs.
Part II (tomorrow) discusses in more detail the third category of generators and how the design and operational characteristics and market share of plants in that category influence the breakeven cost of electricity from the primary types described in Part I.…
Continue Reading“The idea behind the birth of Economics of Energy and Environmental Policy seemed like a good one. A journal concentrating on policy issues. No equations. However, from the very first issue I could see that something was wrong…. [I]n the area of renewable energy, EEEP did not fulfill the function of encouraging open debate.”
I am Jim Plummer, the 74 year old founder of the International Association for Energy Economics (IAEE). In 1977, I had just moved from the federal government (EPA and then the Executive Office of the President under Gerald Ford) to Occidental Petroleum. I observed that there were very competent energy economists in the private sector, public sector, and academia, but there wasn’t a lot of communication among them.
So, I founded the IAEE, and was its second president.…
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