Economies of scale and reliability: the economics of large versus small generating units

The relative costs of large and small generating units are examined by taking into account both economies of scale and unit reliability. For the specific utility system considered, the higher reserve margin required for larger units outweighed their production-cost savings, while several smaller units resulted in lower costs to the utility. Recent studies on economies of scale in electricity generation and recent data on the performance of large units suggest that utilities should consider unit size in determining optimal-capacity-expansion plans. 21 references, 2 figures, 4 tables.