Peak Power Demand - a power demand which exists for up to 10 hours a day. The peak power demand for the sample power pool would be about 2 GW. The primary generators used to meet this demand and to provide the reserve capacity are characterized by low capital costs and high operating costs such that the total cost of electrical energy from these units, operating less than 2,000 hours per year, would be less than that of energy from other types of generators. Storage generators, both pumped hydro-storage units and conventional hydro-generators with associated storage capacity (dams), are used to meet the daily peak demands but have the general cost characteristics of the generators used to meet the intermediate or base load demand. They are operated, however, to meet the daily peak demand throughout the year rather than only during the season when the demand is the highest, and easily meet the 3,000 and 5,000 hours/year operation criterion of intermediate load generators. While generators are purchased by considering the total cost of the generated power, each generator, once acquired, is scheduled for duty according to the incremental cost of generation. The incremental costs are the operating costs that depend directly on the amount of power actually being generated (e.g. fuel costs). The scheduling criterion requires that the cost of operating the system to meet the power demand shall be a minimum. (The fixed costs of each generator must be met no matter how many hours they are used.) When the demand is low, it is met with those generating units whose generating costs are the lowest of all the available units. When the demand increases, the generating units have higher operating costs are brought on-line and the average cost per kilowatt hour increases. Thus, the number of hours a year a generator is likely to be used depends on the time variations of the power demand and the relative operating costs of all the other generators in the system. The decision to add specific types of generation equipment to the generation mix is based on the criterion that the "present worth
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