Table 4.42 Baseline Energy/Economic Data Table 4.43 Energy Use and Prices for 2025 Without SPS To perform these calculations, the change in the price of coal must first be determined. The effect of adding a new source in a constrained economy is to reduce demand for one of the existing fuels (e.g., coal). Consequently, in situations where the market-clearing price lies above the cost, the equilibrium (supply = demand) price level must drop, as illustrated in Fig. 4.44. Demand and supply intersect at point A (from the demand schedule for scenario Ui); the market-clearing price for coal is $1.66 per million Btu. In scenario CI, the supply of coal is restricted and the market clears at a price of $3.45 per million Btu (point B). A straight line through points A and B provides an approximation to the demand schedule. Under these conditions, there are four impacts of SPS, provided only that output exceeds 3.3 quads: (1) SPS displaces 3.3 quads of coal-fired electricity (gross) — reducing coal-fired electricity to zero — and thereby shifts the demand curve for coal to the left by 3.3 quads. This, in turn lowers the market clearing price for coal to $3.08 per million Btu (point C in Fig. 4.44).
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