33 The cost of producing electricity using hydro power is about one-third of the cost of using coal, oil or nuclear power plants and is less than one-quarter the cost of using gas turbine plants. Most of the cost differences come from differences in fuel costs. But part of the cost difference comes from differences in plant costs. It costs less to build a hydroelectric plant than a coal, oil or nuclear plant. Gas turbine plants cost the least to build but are the most expensive to operate.

(Based on Projected Costs of Generating Electricity, International Energy Agency, 2005)

a Use the above information to sketch the AFC, AVC and ATC curves for electricity production using three technologies:

(i) hydro, (ii) coal, oil or nuclear and (iii) gas turbine.

b Use the above information to sketch the marginal cost curves for electricity production using three technologies:

(i) hydro, (ii) coal, oil or nuclear and (iii) gas turbine.

c Given the cost differences among the three methods of generating electricity, why do we use more than one?