Economics+of+Electricity

=__Economics of Electricity__=

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We will focus on the following three methods of generating electricity:
 * Hydro
 * Wind
 * Solar

Within our presentation we will also briefly discuss why certain methods of generating electricity are not viable:
 * Biomass
 * Geothermal

The positives and negatives of our generation methods:

 * SOLAR ||
 * **pros**
 * Decreasing price
 * Requires no fuel
 * Produces no waste, pollution
 * Good for low power uses
 * No noise or moving parts (in appliances) ||
 * * Unreliable
 * Expensive to build solar power stations
 * More you use it for applications the more expensive it become ||
 * WIND ||
 * Pros
 * no fuel needed
 * no waste/ greenhouse gases
 * supply to remote areas
 * has alternate uses/ land can be sued for farming
 * inexhaustible
 * each mWh reduces greenhouse emissions by 0.8 to 0.9 tonnes yearly
 * wind turbines can be set up quick and cheap
 * efficient, reliable & becoming cheap! ||
 * cons
 * not predictable
 * suitable areas are expensive (land)
 * noisy
 * affect television reception
 * cost of production expensive ||
 * HYDRO ||
 * Pros
 * after dam is built, virtually free
 * no waste or pollution, unlike coal
 * more reliable
 * can be stored, ready for demand changes
 * electricity generation can be constant
 * cost effective
 * no radioactive risks ||
 * Cons
 * dams are quite expensive to construct
 * can flood upstream areas
 * not as environmentally friendly as originally thought
 * suitable sites can be hard to find
 * water quality and quantity can be affected ||
 * suitable sites can be hard to find
 * water quality and quantity can be affected ||

Effects on the Macro Economy (Fiscal and Monetary Policy)
The long run, being the next 50-100 years, reveals the contrasting viability. Reliance on solar panels would not be worth it. Our demand for electricity will outrun the effective costs that solar can provide for us; the greater the task the more solar cells, panels needed. A transformation from oil-run to solar powered transportation methods remains a stretch for our nation. Many reasons allude to this same conclusion but the predominant factors would be the unsteady climate and the expensive production. The cars would be more environmentally friendly as they supply no emissions, in turn creating no pollution. Based on the Canadian climate the cars would be completely unreliable considering even with full sunlight the car only produces enough to boil water in a kettle. Unless bought in bulk and consumers awaited the future reduced price, solar cars’ market price would exceed those of the current cars, thus making them undesirable to the consumer. The value of our dollar in comparison to the American’s provides a perfect period to implement this change. Capital would be imported from the United States as they already have solar electricity implemented in some areas. With that, money would be saved allowing for further government investments. Yet to consumers, the dollar value would be viewed with indifference. Since the currency internally remains constant no influence is projected on the paying of bills or the selling of extra electricity.
 * __SOLAR:__** The reliance on solely solar panels is impractical for Canada. A large supply of solar panels would be unaffordable as the current hydro costs are too low to offset the changing climate. In the next 15- 30 years though, implementing solar panels as apart of new housing developments would be beneficial. The panels would work along side hydro- electricity to provide sufficient electricity to houses. The Ontario government is already viewing this option. A subsidy would be provided on these houses spurring two beneficial reactions; less pressure would be enforced on the electrical board and consumers would either save or make money. Despite the greater initial housing cost, consumers would experience a reduced hydro bill or could receive money as they net meter their extra electricity. Regardless of the factor, consumers would spend this new money generating more stimulation in the economy.
 * Long run**
 * Transportation**
 * Monetary**

__**WIND:**__ In the short run involving the next 15-30 years, adopting wind power as one of the large generators of electricity would be prudent for Canada. No subsidy would be employed, rather businesses would compete with each other in a virtually ‘perfect’ industry. With market holding the cost relatively competitive and wind power continuing to decrease overall, consumers would experience reduced electricity bills. As entry and exit is commonly practiced in a perfect industry, farmers, for example, could implement wind mills while maintaining the rest of the field for crop production. In turn, consumers and businesses can afford more investments with the new money source. In the next 30- 50 years though, relying on merely wind power will not be reliable enough for Canada. Supporting this practicality is the lack of legitimate land space to support the thousands of needed wind mills. The problem arises as Canada initially never intended to employ an additional energy source, so the only available land is occupied by crops. With wind power currently satisfying approximately 280 000 households, roughly around 0.2%- 0.4% of the population is accounted for (assuming 2-4 ppl/house). This alludes to the conclusion that wind power is not sufficient for long term consumption. Primarily, the concept of wind powered transportation is far from being practiced. The landscape of Canada supports the impracticality as tunnel construction to carry heavy winds for the cars cannot be pursued. Generally, the strength of wind continues to change making a car hard to build. Even for consumers to adopt the vehicle would be a struggle as they are limited to change, given the unknown that lies in front of employing a new technology. As our dollar value falls roughly around par to the U.S., implementing wind power on farms would be wise. The wind mills would be imported from the U.S. and so we could buy more for our money given our dollar value and their cheaper prices. Farmers would employ the wind mills and charge consumers approximately 5-10 cents per KWh. With the consumers paying the wind farms is the same currency indifference would be created for the value of the dollar.
 * Long run**
 * Transportation**
 * Monetary**

The long run provides the contrasting future for hydro electricity. Alluding to its potential diminish is the fact that there is no practical land space to implement new hydro plants and in turn these plants are quite expensive. Paralleling this is unknown initial fact that hydro plants due impact the environment. Given the new focus of being environmentally friendly has captured Canadian citizens, expanding a fuel source that ruin eco systems will not be readily adopted by the consumer. Within the prior years, Canada has been a large exporter of electricity to the U.S. given our comparatively low hydro costs. Now with the value of the Canadian dollar being roughly at par with the Americans, it will be difficult to maintain those earnings. Less pressure will be on the hydro plants as they are working along side that of solar and wind electricity. However, the hydro plants will need to become more efficient by lowering their costs of production thus charging a lower rate per MWh of electricity. In turn the U.S. will again import electricity.
 * __HYDRO__**- As hydro already accounts for 60% of our electrical power, maintaining this source in the short run along side solar and wind is viable. Hydro projects a significant potential of approximately 182 800 megawatts yet only 34 400 MW is practical for future consumption. Paralleling the increasing electricity demand is the expected growth of hydro at 0.5% per year. Within the rival oligopoly, companies manage to provide consumers with reasonable pricing of 6 cents per KWh.
 * Long Run**
 * Monetary**

Impact on our Potential for Future Economic Growth
If you look into the future of electicity, specifically in our country it is evident that the solution for our energy needs cannot be filled by one method of energy generation. Instead the solution will be to maximize our diverse landscape and use a balance of all method of electricity generation. Canada is home to large waterfalls, windy regions, periods of prolonged heat and sun exposure, large forests, and many other possibilities for energy creation. The focus on one single area would not be the right thing to do and we must invest wisely in each type of energy source.

At the same time we need our organize our brightest minds and find away to create efficient, viable, and green energy sources because it is evident that we will eventually reach a point where alternate methods of generation will be a necessity.

Additional Information (Videos, Charts, General Data, etc.)
WIND power- currently is provides power for 280 000 houses in CANADA - worldwide provides power for 40 million Europeans

Already, we are beginning to experience an electricity shortage which, over the next 15 years, is only expected to get worse. On the contrary, our use for electricity is predicted to double in 2020. Thus as a nation, we should be looking for alternate fuel sources. Various electricity forms in the short run would be a positive change however; the long run requires a stronger source.



Basic Cost/Benefit Analysis
How an electric car compares to oil in terms of cost per mile: __Solar:__ Net metering: When you generate more energy then you use on your solar system the non-used energy can be sent back to your local power grid and you will receive a credit towards your own costs depending on how much energy you have produced for others.
 * In North America the average cost per mile in a car fueled by gasoline is **10¢ per mile.**
 * If it costs about //$2-4// to charge an electric car and the maximum amount of miles you can drive on a fully charged battery is //150 - 200// miles then the average cost per mile in an electric car is **1-2¢ per mile**
 * When electric cars were more predominant in the 90's the cost was about //4¢ per mile//, but as battery technology (capacity) has improved the cost per mile has decreased.
 * Cost per kWh:** $0.22-$0.44
 * Average Cost per day:** 15-30 kWh/per day @ $0.22-$0.44 = $3.30-$13.20
 * Average Cost per year:** $1204.50- $ 4818.00
 * Current average cost per year:** 10 585 kWh @ 5.5 cents = $582.18
 * Spillover costs:**
 * Spillover benefits:** no greenhouse gases emitted, when net metering is in effect using more reusable energy.
 * Extraneous costs (i.e.- equipment):**
 * Solar panels: $700 (50 watt) -$8000 (600 watts) (include batteries for energy storage)
 * Installation (price Dependant on job size and house lay-out)
 * Rebates/ Government Incentives:**
 * Ontario’s Standard Offer Program/ Net metering: When you generate more energy then you use on your solar system the non-used energy can be sold back to your local power grid at a rate of $0.42/kWh. Your contract lasts for 20-years.
 * Northern Ontario Heritage Fund: program only available to small businesses in Northern Ontario, once your energy resources are assessed if business is saving significant amounts of energy. A maximum of 50% of project costs can be covered. (Maximum value is $250 000). Valid until December 31, 2007.
 * EcoENERGY for Renewable Heat: offers businesses a 25% rebate (value up to $80 000) for space or water heating systems.
 * EcoENERGY for renewable power: “This program provides a 1 cent/kWh incentive for up to 10 years to eligible low-impact, renewable electricity projects constructed over the next four years.” Valid until March 2011.
 * Accelerated Cost Allowance: “Allows taxpayers an accelerated write-off at up to 30% per year for equipment generating electricity from solar electric systems.” No restrictions on size of solar system.
 * PST rebate: government reimbursements for all solar system equipment.

Supply, Demand, and Elasticity

• Canada is the 5th largest electricity producer in the world accounting for 3.8% of the worlds total electricity production. Per Capita we are the 3rd largest producer. • Canada’s supply is increasing and has increased roughly 10% over the past decade. • Canada is also very diverse in the ways in which it produces its electricity

• Canada’s 3 Major Forms Of Production:

• Hydro Generated electricity(60%)

• Thermal/Coal(24.2%)

• Nuclear Power(12.4%)

• The use of natural Gas in electric power generation has caused a 132% Growth rate for Canada over the past decade. Other reasons for our growth have been energy efficiency, low costs and shorter construction periods.

• Canada is one of the top producers but also is one of the top consumers in the world. In 2003 we used about 3.6(%) of the worlds total consumption of electricity and we are growing at an annual rate of 1.8%. Although our population growth lingers at 1 % annually.

• With a 16 % growth in demand we outweigh our supply by 6 % seeing how its growth is only 10 % therefore there is a shortage approaching.

Canada is also the fourth largest exporter of electricity, it is estimated that about 7-9 5 of our electricity produced is exported to the U.S. alone. Canadian Electricity Demand Projections to 2020*

• There are four technological advances in which Canada has made and is now practicing: • Distributed Generation (DG) — more complex, automated systems involving the use of small-scale power generation technologies located close to the load being served. • Distribution Automation (DA) — operating a self-diagnosing and self-healing distribution grid. • Demand Side Management (DSM) — currently customer-based initiatives, but in the future, DA will have the ability to assist with DSM efforts. • Automated Meter Reading (AMR) — which can work in conjunction with DA to automatically report outages, provide additional services such as security systems, broadband, power quality, etc. • Power Quality (PQ) — 24-hour monitoring with different levels of service (user pay).

• The price of electricity in Canada varies every hour and is dictated by business and home use which is a result of weather and economic activity.