Graph 1 Research Paper

Decent Essays
Graph 1 demonstrates the cost of generating 1 kWh of electricity from eight types of power generations. Producing power from solar energy is the most expensive. This is due to the fact that solar panels are highly priced, making solar energy generation the most costly. Following solar energy is petroleum, which is the most expensive fossil fuel energy to generate because it is laborious to pump. The cheapest to produce is natural gas; with the reason being that the technologies for drilling and cracking is advanced.
Graph 1: Cost to Produce 1 kWh of Electricity [5].
2. Energy Economics and Markets
2.1 Introduction (Page 2)
In the Energy Market Game, each group acts as an electricity business with a capital of £400 million. The teams are required
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 Evaluate the skills required in strategising, financing and assigning resources to appropriate areas.
 Examine and identify potential predicaments.

2.3 Background (Page 2)
An electricity pool market is an organisation that allows the purchases and sales of electricity to take place. As there are many types of energy sources, the way in which electricity is put online is determined by merit order. Merit order is a mechanism which dispatches the energy with lowest marginal energy cost first. System marginal price (SMP) is the value at the equilibrium point between demand and supply, and is the amount that will be charged on customers and companies.

2.4 Theory (Page 2)
Capital cost for solar PVs is high owing to high values of PV cells. However, offshore wind energy has a higher start up price due to the expenses involved in constructing its systems along with the protections needed. Capital cost of onshore wind farms is lower as they are more dynamic and economical to construct. Gas technologies have lower start up amount than coal on account of their low requirement for land space [6]. In addition, expenditures involved in the manufacture of coal fired units are high
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In contrast, it will rise for gas and coal as they emit carbon dioxide. Consequently, fossil fuel generations will be pushed out of merit and the market as a result of their high generation costs. For this reason, SMP will reduce because most or all RE units will be in merit since they have zero marginal energy cost.

It is unlikely that changes in fossil fuel values will affect the generation cost of RE. The founder of Bloomberg New Energy Finance (BNEF), Michael Liebreich, stated that the world is deviating to RE so there will be significant development of RE larger than that of gas and coal [9]. A boost in fossil fuel values will gain the energy generation cost of both gas and coal thus there will be more investments in RE generation, which in turn will cut down SMP. Contrarily, supposing there was a raise in the value of fossil fuels, their energy generation cost will decrease resulting in a gain of the SMP.

2.5 Methodology (Page
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