Electricity Generation - Economics of Generation and Production of Electricity

Economics of Generation and Production of Electricity

The selection of electricity production modes and their economic viability varies in accordance with demand and region. Hydroelectric plants, nuclear power plants, thermal power plants and renewable sources have their own pros and cons, and selection is based upon the local power requirement and the fluctuations in demand.

Thermal energy is economical in areas of high industrial density, as the high demand cannot be met by renewable sources. The effect of pollution is also minimized as industries are usually located away from residential areas. These plants can also withstand variation in load and consumption by adding more units or temporarily decreasing the production of some units.

Nuclear power plants can produce a huge amount of power from a single unit, but since most of the power plants built before 1990 use hard water as a coolant, setting them up near a source of hard water is the only viable economic option. Recent disasters in Japan have raised concerns over the safety of nuclear power.

Hydroelectric power plants are located in areas where the potential energy from flowing water can be harnessed for moving turbines and the generation of power. It is not an economically viable source of production where the load varies too much during the annual production cycle and the ability to stop the flow of water is limited.

Renewable sources other than hydroelectricity (solar power, wind energy, tidal power, etc.) are currently expensive to produce, though with advancements in technology their cost of production is coming down. Many governments around the world provide subsidies to offset the high cost and make their production economically feasible.