3. Case 2) Coal plants exit, and Solar generation enters the market Now, let's consider a scenario where the coal power plant (#1) shuts down and exits the market, and a solar generation facility is constructed. The capacity of the solar generation facility is the same as the coal power plant that went out of business. The generation capacities of this market are shown below, along with their MC. Table 3: Power Plant Capacity and Marginal Cost: Case 2 Plant # Energy Source Capacity (MW) MC (S/MWh) 2 Oil 100 90 3 Natural Gas 500 50 4 Nuclear 600 0 5 Solar 300 5 Note that the solar plant (#5) can generate electricity only from 7 AM until 5PM. During these hours, the plant can generate up to its full capacity (300 MW) but cannot generate any when unavailable. (a) Draw a supply curve for each hourly market (4AM, 10 AM, 2PM, 6PM). (b) Find the market clearing prices and calculate how much electricity each power plant generates in the hourly market (4AM, 10AM, 2PM, and 6PM). (c) Find the average price of electricity. (d) Compare the CO2 emissions in Case 2 to that in Case 0 (use the emissions data provided in the lecture slides). Now, let's calculate how much profit the nuclear power plant earns in Case 0 and in Case 2. Profit can be calculated by multiplying surplus (markup, which is market clearing price, P*, minus the marginal cost, MC) with the generation amount. (e) Fill in the surplus values in the table below. Hour 4 AM 10AM 2PM 6PM Table 4: Nuclear power plant's surplus (P*- MC) Case 0 Case 2 (f) Suppose that the nuclear plant's operation incurs a fixed cost as the plant occasionally must be turned off for maintenance and further inspections. If the FC of nuclear plant is $60,000/day, do you think this plant can still operate in Case 0 and Case 2? (assume that there are only four hours in a day).
3. Case 2) Coal plants exit, and Solar generation enters the market Now, let's consider a scenario where the coal power plant (#1) shuts down and exits the market, and a solar generation facility is constructed. The capacity of the solar generation facility is the same as the coal power plant that went out of business. The generation capacities of this market are shown below, along with their MC. Table 3: Power Plant Capacity and Marginal Cost: Case 2 Plant # Energy Source Capacity (MW) MC (S/MWh) 2 Oil 100 90 3 Natural Gas 500 50 4 Nuclear 600 0 5 Solar 300 5 Note that the solar plant (#5) can generate electricity only from 7 AM until 5PM. During these hours, the plant can generate up to its full capacity (300 MW) but cannot generate any when unavailable. (a) Draw a supply curve for each hourly market (4AM, 10 AM, 2PM, 6PM). (b) Find the market clearing prices and calculate how much electricity each power plant generates in the hourly market (4AM, 10AM, 2PM, and 6PM). (c) Find the average price of electricity. (d) Compare the CO2 emissions in Case 2 to that in Case 0 (use the emissions data provided in the lecture slides). Now, let's calculate how much profit the nuclear power plant earns in Case 0 and in Case 2. Profit can be calculated by multiplying surplus (markup, which is market clearing price, P*, minus the marginal cost, MC) with the generation amount. (e) Fill in the surplus values in the table below. Hour 4 AM 10AM 2PM 6PM Table 4: Nuclear power plant's surplus (P*- MC) Case 0 Case 2 (f) Suppose that the nuclear plant's operation incurs a fixed cost as the plant occasionally must be turned off for maintenance and further inspections. If the FC of nuclear plant is $60,000/day, do you think this plant can still operate in Case 0 and Case 2? (assume that there are only four hours in a day).
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 3.4CE
Related questions
Question
Transcribed Image Text:3. Case 2) Coal plants exit, and Solar generation enters the market
Now, let's consider a scenario where the coal power plant (#1) shuts down and exits the market,
and a solar generation facility is constructed. The capacity of the solar generation facility is the
same as the coal power plant that went out of business. The generation capacities of this market
are shown below, along with their MC.
Table 3: Power Plant Capacity and Marginal Cost: Case 2
Plant #
Energy Source
Capacity (MW)
MC (S/MWh)
2
Oil
100
90
3
Natural Gas
500
50
4
Nuclear
600
0
5
Solar
300
5
Note that the solar plant (#5) can generate electricity only from 7 AM until 5PM. During these
hours, the plant can generate up to its full capacity (300 MW) but cannot generate any when
unavailable.
(a) Draw a supply curve for each hourly market (4AM, 10 AM, 2PM, 6PM).
(b) Find the market clearing prices and calculate how much electricity each power plant
generates in the hourly market (4AM, 10AM, 2PM, and 6PM).
(c) Find the average price of electricity.
(d) Compare the CO2 emissions in Case 2 to that in Case 0 (use the emissions data provided
in the lecture slides).
Transcribed Image Text:Now, let's calculate how much profit the nuclear power plant earns in Case 0 and in Case 2.
Profit can be calculated by multiplying surplus (markup, which is market clearing price, P*,
minus the marginal cost, MC) with the generation amount.
(e) Fill in the surplus values in the table below.
Hour
4 AM
10AM
2PM
6PM
Table 4: Nuclear power plant's surplus (P*- MC)
Case 0
Case 2
(f) Suppose that the nuclear plant's operation incurs a fixed cost as the plant occasionally
must be turned off for maintenance and further inspections. If the FC of nuclear plant is
$60,000/day, do you think this plant can still operate in Case 0 and Case 2? (assume that
there are only four hours in a day).
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