ECON7740_.xlsx - Q1(1 Defination of Levelived Cost of Electricity(LCOE The wide range of electrical power technologies available both renewable and

ECON7740_.xlsx - Q1(1 Defination of Levelived Cost of...

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Q1 (1) Defination of Levelived Cost of Electricity(LCOE) The wide range of electrical power technologies available, both renewable and non is quite varied with respect to physical principles and operation - a solar PV system LCOE is the Annual Equivalent Cost per unit of electricity generated including the c (2) LCOE = Total cost of ownership ($) / System production over its lifetime (kWh) LCOE could decrease by anything that increases production or reduces cost lowers Examples: First, system positioning - optimized for maximum energy output would increase pr Which means the company could upgrade the cleaning energy system to achieve th Second, incentives such as tax exemptions or tax credits could reduce cost in order Which means if government could reduce tax or give subsidy to these new clean en Q2 (i) City council cost $42,000 Labor wage $22,000 Cost of material $4,000 include federal sales tax Federal company tax $2,000 Council end user benefit $20,000 Non-market value benefit $30,000 Pollution cost $2,000 Federal unemployment ben $2,000 Opportunity cost of labor 20% (i) a. Market CBA End user benefits $20,000 Council cost -$42,000 Benefit -$22,000 The market CBA is from the council perspective, use the end user benefits which co (i) b. Private CBA Revenue to Interstate Firm $42,000 Direct labour -$22,000 Cost of material -$4,000 Tax -$2,000 Benefit $14,000 In this case, we only conider the Interstate firm is the investor, so I use the firm's re As the interest is for previous debt so I do not include it, and as the question gives u (i) c. Efficiency CBA
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Non-market value benefit $30,000 Oppoturnity cost of labour -$4,400 Pollution cost -$2,000 Material cost -$3,200 Benefit $20,400 The material is an input sourced from additional supply, so we use the seller's price (i) d. Referent Group CBA = Efficiency CBA - Private CBA Efficiecny CBA $20,400 Private CBA $14,000 Referent Group CBA $6,400 Because the Efficiency CBA = Referent Group CBA + Non-referent Group CBA, so Re (ii) Referent Group Net Benefit Distribution Consumer $8,000 Federal government $4,800 Labour(rent) $15,600 Council -$22,000 Total benefit $6,400 In this distribution we sum them and get $6400 which is equal to the result in the p Q3 Example: Suppose in a country the Nike sneakers replaces existing demand from alternative the price should be used for Nike sneakers in an efficiency CBA is $61.5 which is the Explain: If the output of the project satisfies existing demand from alternative source, value Because Ps is the per unit benefit (in terms of the avoided tax) of the projcet outpu Example: Suppose at the same equilibrium output level, consumers are willing to pay more fo Explain: If the output of the project satisfies additional demand, we should value it at a price Because Pb shows the effect of the distortionary tax on the price paid by buyers. W Example: Suppose you were costing wood in producing table, and it is sourced from an altern its opportunity cost is the value of output forgone in that use. You should use the bu Explain: If the project inputs is divered from alternative market use elsewhere in the econom which is measured by the demand price ( the price of buying an extra unit). In the c
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