Reliability models for electric power production costing

The paper describes the use of reliability models for estimating the cost of producing electric power. One of the features of electricity production is that it cannot be conveniently stored, and therefore at every instant of time there should be sufficient production to meet the demand. Thus the availability of the generating units plays a key role in electric power production cost. The paper describes a model for evaluating it based on the reliability of generating units. A formula is given for the expected value of production cost for a power generation system, and approaches for evaluating the variance is discussed. The modifications that will be needed to capture the effects of deregulation are briefly discussed. A numerical example is given.