Electric power generation electricity prices

When electricity is bought from centralized power generation companies, the price tends to be more stable than fuel costs, since power generation companies tend to negotiate long-term contracts for fuel supply. 

Heat Pumps. A heat pump is a refrigeration system that raises heat to a useful level. The most common appHcation is the vapor recompression system for evaporation (qv) (Fig. 14). Its appHcation hinges primarily on low cost power relative to the alternative heating media. If electricity price per unit energy is less than 1.5 times the cost of the heating medium, it merits a close look. This tends to occur when electricity is generated from a cheaper fuel (coal) or when hydroelectric power is available. 

Electric Power Generation. Coal is the primary fuel for thermal electric power generation. Since 1940 the quantity of bituminous coal consumed by electric utilities has grown substantially in each successive decade, and this growth is expected to continue for many years. Coal consumed by electric utilities increased from about 536 x 10 t in 1981 to 689 x 10 t in 1989 (2). The reasons for increased coal demand include availability, relative stability of decreasing coal prices, and lack of problems with spent fuel disposal as experienced in nuclear power plants (see Nuclearreactors). 

Steam costs vary with the price of fuel and electricity. If steam is only generated at low pressure and not used for power generation in steam turbines, then the cost can be estimated from fuel costs assuming an efficiency of generation and distribution losses. The efficiency of... 

The potential of stationary fuel cells for distributed generation depends on feed-in tariff policies and electricity and gas prices, as well as on market competition from gas engines and small turbines. SOFCs and MCFCs, mostly fuelled by natural gas, are likely to play an important role for combined heat and power generation in buildings. 

In the light of the scale of profits made by the electricity-generating sector in countries with competitive markets (empirical evidence set out in Sijm et al., this issue), this proposition is now more widely accepted. The electricity sector is barely exposed to foreign competition and, unlike other sectors, it does not face electricity price increases in inputs. In countries with competitive markets, greater cutbacks for the power sector have no direct implications for other sectors, since the price is predominantly set by the opportunity cost of carbon, not by the profit/loss balance of power generators. 

We represent the difference between the behaviour of individual generators and the impact on the system price by defining the add-on and the work-on rate. In a competitive environment, generators add-on the opportunity costs of C02 allowances to the power price. The increase of the bid of the marginal unit will then determine how much of the C02 allowance prices are worked-on the electricity price. However, in a liberalized market, prices are ultimately determined by a complex set of market forces. As a result, the work-on rate may be lower than the add-on rate. 

By the end of the year 2005, the German electricity prices further increased. We did not analyse the reasons for this development. The price increase could be attributed to one of the following three factors (i) scarcity of generation capacity, (ii) higher gas prices than in previous winters, thus higher prices when gas is at the margin, and (iii) the exercise of market power. 

Most phase I NAPs provide for NE allocations based on a general emission rate and predicted activity level. For example in The Netherlands (NL), new entrants are allocated allowances based on projected output or fixed cap factor multiplied by uniform emission rate in line with that of a combined-cycle gas turbine (CCGT). In France, Germany and Poland, C02-intensive power generators, such as coal-fired installations, receive the highest number of allowances per kW installed. The literature highlights the risk that NE provisions can create distortions (Harrison and Radov, 2002). In order to illustrate how these rules can impact electricity prices and C02 emissions in our GB simulations, we focus on two approaches one based on a uniform benchmark and one based on a fuel-specific benchmark. In both cases the forecast capacity factor of new entrants is fixed at 60%. 

The results with uniform NE allocation are shown in Figure 7. With a fixed allowance price, as the value of the NE allocations increases, additional gas power stations replace peaking generation, usually provided by open-cycle gas turbines, or demand side response as the value of the allocation increases. The electricity price falls and C02 emissions fall. Nevertheless, at a certain value of total NE allowances (between 40 and 50/KWh), the option for CCGT to replace peakers is exhausted and it becomes viable to invest in new coal-fired power stations. From this point onwards,... 

Fuel-specific benchmarks applied to existing power stations create incentives to shift production towards more C02-intensive generators. Whether we refer to fuel-specific updating or NE allocation, for any given price of C02, these allocation methods will result in C02 emissions in excess of the auctioning case. If operators and investors expect that future NAPs are similar to current NAPs, then they anticipate receiving fuel-specific allocation in the future. If the C02 budget were fixed, this would imply that C02 prices, and hence electricity prices, would have to rise. 

According to the latest observations on the EU electricity market and to the emerging windfall profits debate in the EU, we assume that power generators have the ability to pass on to electricity customers 100% of their extended cost rise. For the sake of convenience, this rise in a given country equals the C02 price multiplied by the national unitary emission of the power sector, whatever the allocation method for the cement industry may be - as if the allowances in the electricity sector were always grandfathered. 

Five years ago the wholesale price of a metric ton of coal was about 25 in early 2008 it was up to 140 and rising. In contrast to oil and natural gas, the United States has very substantial coal reserves amounting to 27% of the global total (Table 1.6). Yearly coal consumption by the United States is 1.1 billion tons. Today in the United States, about 2 trillion kWh of electricity (about 55% of the total) are produced from coal (Table 1.4), and by 2030, that number is projected to rise to 3.3 trillion kWh (or 62%). The carbon emission from electric power generation is about 2.3 billion metric tons (90% from coal), and that emission is also projected to rise to 3.3 billion metric tons by 2030. Some projections in the past suggested that at this rate American coal... 

Therefore, even if an installed solar-hydrogen power plant costs 1 billion more than a regular solar plant, this is still under the costs of state-of-the-art nuclear or fossil power plants of the same size range. If the solar collector cost is estimated at 3,000/kW, the life expectancy of the equipment at 25 years, and the interest on investment at 5%, the unit cost of electricity generated will be about 12tf/kWh. This cost is already competitive with fossil-generated peak electricity costs and even with nonpeak electricity prices in some areas. (In June 2007, in Connecticut in my household, we paid 18.9 /kWh for our electricity.)... 

Past experience shows that as the equipment needed for new technologies starts to be mass produced, its prices drop. The cost of wind power-generated electricity has already been reduced to one quarter of that of the first installations. An ultrathin-film solar collector manufacturer (Nanosolar) claims that it will soon market collectors at costs that are severalfold less expensive than today s PV prices. We do not know if that particular claim is correct or not, but we know that time is on our side. Therefore, it is realistic to expect that as markets expand, the costs of mass-produced renewable energy devices will also drop and the cost of transition to a solar-hydrogen economy over several decades will become not only affordable, but will also create jobs and an economic boom. We should remember that drastic changes can occur rapidly after all, a century ago electricity was a luxury that only 3% of the households had. The same will occur with renewable energy over the 21st century. 

---