Electric generation variable costs

The variable cost of electric generation is a measure of the incremental cost of generating a MWh of electricity from a power plant. This is used to determine the hourly power plant dispatch order of units the system operator will ramp up or down in real time, and it is a key factor affecting the wholesale marginal cost of electricity. Variable costs include fuel costs, and operations and maintenance (O&M) costs that are related to how many hours the plant runs. In some cases, start-up and/or shut-down costs may be included. Variable costs are unique to each power plant although generalizations can be made relative to specific technology configurations. For fossil fuel units including coal, natural gas, and petroleum variable costs change significantly with changes in fuel costs. An example of variable costs by generation type is given below:

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• Electric generation capital costs

• Electric generation levelized costs