Gas-fired plants would minimize construction costs

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Reference no: EM131099410

A coal-fired power plant can produce electricity at a variable cost of $0.07 per kilowatt-hour when running at its full capacity of 30 megawatts per hour, $0.16 per kilowatt-hour when running at 20 megawatts per hour, and $0.24 per kilowatt-hour when running at 10 megawatts per hour. A gas-fired power plant can produce electricity at a variable cost of $0.12 per kilowatt-hour at any capacity from 1 megawatt per hour to its full capacity of 5 megawatts per hour. The cost of constructing a coal-fired plant is $70 million, but it costs only $14 million to build a gas-fired plant. Instructions: In part b, enter your answer as a whole number. In parts c and d, round your answers to 2 decimal places.

a. Consider a city that has a peak afternoon demand of 80 megawatts of electricity. If it wants all plants to operate at full capacity, what combination of coal-fired plants and gas-fired plants would minimize construction costs? Two coal-fired plants plus four gas-fired plantsOne coal-fired plant plus ten gas-fired plantsSixteen gas-fired plants.

b. How much will the city spend on building that combination of plants? $ million.

c. What will the average cost per kilowatt-hour be if you average over all 80 megawatts that are produced by that combination of plants? (Hint: A kilowatt is one thousand watts, while a megawatt is one million watts.) $ per kilowatt-hour. d. What would the average cost per kilowatt-hour be if the city had instead built three coal-fired plants? $ per kilowatt-hour.

Reference no: EM131099410

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