PPT Slide
Problem 1.3: Independent Power Producers (IPP’s)
For the prototype power system shown, the independent power producer charges the utility 6 ¢/KWH for the energy that it injects (at the rate of 350 MW) into it. The utility’s own energy costs 10 ¢/KWH.
Part A: What percentage of the IPP’s injected power is actually consumed by the load* and how much revenue (in k$/h) does the IPP receive from the utility?
Part B: What is the IPP’s impact (in ¢/kWh) on the utility’s production cost?
Part C: Assuming the utility breaks even, how much does the load’s electricity cost decrease (in ¢/kWh) as a result of the IPP’s generation? In other words, how do utility customers benefit from allowing the IPP to interlope in the electric utility’s marketplace?
Part D: Suppose the IPP is located in a geographically remote area where the electric utility has very few customers. Furthermore, suppose that (since there are so few customers there) there is not enough transmission capacity between the IPP and the utility to support the IPP’s power injection. This means that in order for the IPP to sell power to the utility, the capacity of the transmission system between the two parties must be increased. Who should pay for this capacity increase (e.g., new transmission line(s)) and who should pay for its maintenance after construction?
*N.B.: The terms load, demand and customer(s) are used interchangeably here.