Modeling of economic feasibility of transition to own power generation

Abstract

Cross subsidizing in power industry is the mechanism allowing one groups of consumers to pay the electric power at the price below limit costs, at the same time for other groups of consumers establishing the price above limit costs. Similar price discrimination leads to that the industrial enterprises buying the electric power on raised tariffs, are compelled to look for cheaper alternative ways of power supply. In this connection the enterprises gradually make the decision on construction of own generating capacities. In this article it is investigated to pass how favorably to a question to the enterprises of various branches to own generation of the electric power at the developed and predicted price level on the electric power for the industrial enterprises taking into account cross subsidizing and on condition of its full reduction.

Keywords

• power industry
• cross subsidizing
• own generation at the enterprise
• wholesale market of the electric power