Cost of Electrical Energy
The cost of electrical energy is defined as the amount of money required to generate and produce a unit of electricity . There are three types of cost of electrical energy . They are :
- Fixed cost
- Semi-fixed cost
- Running or operating cost
Fixed Cost : Fixed costs are the expenses that remain constant irrespective of amount of electric produced and consumed . It is independent of maximum demand , capacity of the plant and total energy generated . These costs remain fixed in all conditions . It is due to the salaries of employees i.e. higher officials , annual cost of central organization and interest on capital cost on land .
Semi-fixed cost : Semi-fixed costs are the expenses that are depend upon the maximum demand but it is independent of the energy generated . Semi-fixed costs are directly proportional to the maximum demand .This is due to the capital costs on the land ,construction costs , equipment cost and transmission and distribution costs . This also depends on salaries of the management and also installation costs.
Running or operating cost : Running or operating cost are the expenses that only depend on the energy generated by the plant .This is due to wear and tear of the plant , fuel cost that varies with the type of the plant ,maintenance cost and repairs of the plant , lubricating oil and also salaries of operating staff.
Economics of Power Generation
Here in this article, we will discuss the economics of power generation, terminologies used in the economics of power generation, isolated and integrated operations, and their differences , merits of integrated operation, classification of cost of electrical energy, tariff and its types and power generation charges briefly.
Table of Content
- What is the Economics of the Power System?
- Terminologies
Isolated and Integrated Operation- Differences Between Isolated and Integrated Operation
- Advantages
- Cost of Electrical Energy
- Tariff – Its Types
- Solved Example
Conclusion
Frequently Asked Questions