The role of energy limited hydro equipment in an optimal plant mix

The main purpose of this paper is to highlight the influence of the main characteristics of hydropower on the choice of an optimal generating plant mix. Marginal conditions for a cost minimizing approach are developed while incorporating the effects of the rising costs of hydraulic forces, the cost of added hydroturbines (energy limited), and the costs of developing different hydro sites. It is seen that the main difference between the marginal conditions for a hydro system and for a thermal one comes from the limited availability of water power. This framework is then applied to data drawn from the current expansion programme of Quebec Hydro. Although the analytical framework relies on simplifying assumptions, the results are rather close to those provided by Quebec Hydro. The results are then used to evaluate the marginal costs of providing additional power for every hour of the year. These marginal generation costs range from a high of 6.0¢ during the peak period to a low of 1.6 ¢ for the base period, both being measured in 1980 dollars.