The capacity benefit of hydro
The hydro can operate at full capacity for 2,400 MWh / 300 MW = 8h.
So the production cost for 8 hours of hydro full-capacity peak-load shaving is C(2,000 - 300) x 8h + C(600) x 8h x 2 = {0.1x (1,700)2 - 100 x 1,700 + 85,000} x 8h + {0.1 x (600)2 - 100 x 600 + 85,000} x 8h x 2 = 204 k$/h x 8h + 61 k$/h x 16h = 1.632 M$ + 0.976 M$ = 2.608 M$ (a savings of 648 k$).