Tke Breakeven Cost or Peaking Capacity

By generalizing and expressing as an equation the significant quantities in any relationship it can be made apparent just how each term influences the answer sought. In this paper, a mathematical treatment is developed to define the economic balance between generating capacity having differing first costs and differing operating costs. This is done in terms of annual carrying charges, production costs, and spinning capacity credit. The method is applied to the economics of low-first-cost high-operating-cost capacity, sometimes called peaking capacity. The paper itself, being limited to the mathematics of economic balance, does not discuss and compare different kinds of peaking units. However, in the Appendixes, the peaking equation is modified for use with conventional and pumped-storage hydro capacity employed for peaking purposes.