Use the case of electrical power generation to explain why the energy resource inputs that are used are sometimes low-cost and other times high-cost

Question

What will be an ideal response?

Answer 1

One of the interesting aspects of energy efficiency is that it involves using a mix of energy inputs, some of which are more expensive than others. Electrical power generation provides an illustration of this point. An electric plant faces varying demands for power during the day and night. To meet these varying demands, electric companies will build a large plant that requires high fixed costs to build, but produces energy at a low price when it is fully operational and meets most of peak consumer demand. To supplement its energy production for peak demand periods, instead of building another large plant, it will build a smaller plant that has a lower fixed cost to build, but which produces energy at a higher cost.