Energy sector Flashcards
(16 cards)
Why must there be capacity to math demand at all times for energy?
Costly to store electricity
What determines capacity of electricity?
Peak demand
What are Baseload units and Peaker units?
Baseload units run through the day
Peaker units are employed to cover peak demand
What are examples of baseload and peaker units?
Baseload - nuclear energy
Peaker - natural wind turbines
What is the general idea of peak-load pricing?
charge fixed cost to users during peak period
charge only variable cost to users during off-peak period
When does peak-load pricing occur?
When demand varies across two periods ( day time / night time )
Draw a graph showing peak load pricing and showing the efficient peak load prices
check ppt 15
What is the equation for total cost in the peak-load pricing model?
check ppt 16
What does beta represent in peak-load pricing?
The cost of expanding capacity by one unit
What is non-peak pricing?
Electric utility charges a single price for both periods.
How is the non-peak price set?
between MC(low) and MC(high)
What is the effect of non-peak pricing on off-peak and peak demand compared to peak-pricing and what is the effect?
off peak demand decreases ( increase in p )
peak demand increases ( decrease in p)
larger capacity is necessary to meet peak demand
Draw a graph showing the deadweight losses as a result of non-peak pricing
check ppt 17
Is welfare higher under peak-load or non-peak pricing?
higher under peak-load pricing
What is the structure in the energy market model?
Generation (energy)
Transmission lines
Distribution
