Part I yesterday established that wind electricity erodes the market share and utilization rates of our base-load fleet. But do governors and state legislators understood even that much?
I hope they do–or that they are coming to that understanding. Does wind electricity save some fuel? Yes. But that is all that it saves, while its cost impacts to electricity consumers extend beyond the direct costs of wind energy. It lowers the capacity factors of base-load generators which raises those generators’ per MWh breakeven price point to the extent those base-load generators have fixed costs.
Existing generators often have lower fixed costs than new ones due to the fact that their initial construction debt is partially or fully paid off. And it is true that new combined-cycle gas (CC Gas) generators have lower fixed costs than new coal or new nuclear plants.…Continue Reading
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.…Continue Reading