margin could also be included. This approach has been used by ERDA and EPRI to assess the desirability of using fuel cells and £ batteries. Unfortunately, the resources available for this study do not allow this approach to be used and a significantly simpler and somewhat less accurate approach has been taken. To avoid having to consider, in detail, the costs associated with every piece of equipment in the power pool, a simple economic model unit was used. This model assumed: • The average cost of electrical energy in 1974 was 40 mills/kW-hr • The average fixed costs (equity costs, insurance costs, maintenance, etc.) of electricity in 1974 was 25 mills/kW-hr • The fixed costs increased with the general inflation rate, i^ - inflation affects the equity costs by affecting the capital cost of equipment added to meet a growing demand for power. • The average cost of fuel to generate electricity was 15 mills/kW-hr - fuel costs increase at a fuel inflation rate, i^, which is not necessarily equal to the general inflation rate but is unlikely to be less. • The yearly peak power demand increases at a growth rate, g, which is equal to the utilities yearly growth in energy sales. • The system load factor remains constant at .56. "Economic Assessment of the Utilization of Fuel Cells in Electric Utility Systems", Public Service Electric and Gas Company, EPRI EM-336, November, 1976.
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