Incremental cost of power generation

Thread Starter

محمد نور

Joined Dec 17, 2016
45
The more load on the generator’s power lines, the more power it takes to turn the generator’s shaft. So it needs more fuel (coal, gas, ...)
You right, but incremental cost means that as generated power increases the cost of every generated kW increases, and this is what I am asking about.
 

GopherT

Joined Nov 23, 2012
8,012
You right, but incremental cost means that as generated power increases the cost of every generated kW increases, and this is what I am asking about.
Your theory implies (by reversing your claim) that the less power the plant produces, the more efficient it becomes until it is at some maximum efficiency at zero power.

So, there is a designed maximum efficiency rating for a power plant. At lower or higher output, the cost per kW increases.
That is for power generating efficiency.

In terms of financial efficiency, generally the more power that is produced, the more profitable the asset becomes. This is because of the huge financial investment in a power plant (these are called “fixed production costs”). Fixed costs are interest on the investment, licensing fees, taxes, security and labor (people who must be present no mater how much power is generated).

The little efficiency lost in power conversion is usually compensated by diluting the fixed costs so that, at the end of the month, it is better to run WFO instead of at maximum energy efficiency rates. That is, if there is market demand for all the energy that can be produced.
 
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