Revisiting cost recovery of generation capacity investments with annualized cost representation

Abstract

This paper presents in a systematic way the basic ideas about cost recovery of marginalist theory. Differences between short? and long?term costs are analysed and its consequences on investment cost recovery on a basic annualized generation expansion capacity model. It is a first step in order to extend these results to more complex models including several years.

This paper presents in a systematic way the basic ideas about cost recovery of marginalist theory. Differences between short? and long?term costs are analysed and its consequences on investment cost recovery on a basic annualized generation expansion capacity model. It is a first step in order to extend these results to more complex models including several years.