ECON3220 - Cost- Benefit - Analysis - Cost of Electricity - Renewables Vs Coal - Case Study Assessment Answer

ECON3220 - Cost-Benefit - Analysis - Cost of Electricity - Renewables Vs Coal - Case Study Assessment Answer

Assessment Task:

1. Introduction: The task at hand
A private mining company, Rio Blanco Corporation (RBC), which is a major electricity user, needs to decide whether to enter into a new contract with one of the State’s main electricity retailers for the supply of its electricity needs for the next 20 years. The dilemma it faces is that the State’s power grid is sourcing its electricity exclusively from existing, black coal-fired power stations at a supply price, equal to the marginal cost of electricity generation, of $60/MWh (constant 2020 prices). It is widely acknowledged that the external costs of carbon emissions from coal-fired electricity generation are extremely high relative to other technologies, especially renewables. It is estimated that for every MWh of electricity generated by a black coal-fired power station, 0.8 tonnes of carbon is emitted. There is growing recognition of the need for electricity regulatory authorities to factor in the Social Cost of Carbon (SCC) in comparative cost calculations. To internalize such external costs the State Government is planning to introduce of a carbon price/tax. For coal-fired electricity generation this additional cost, over and above the current contracted supply price, could be significant. Although there is some uncertainty as to how much and when the carbon charge will be implemented, the prevailing view among most stakeholders is that this will happen ‘sooner rather than later’. For the purpose of this study it should be assumed that a carbon tax, initially set at $20/tCO2 (constant 2020 prices) will be introduced at the beginning of 2024 and will increase by $2/tCO2 per annum until it reaches a level of $40/tCO2 (constant 2020 prices), and remains at $40/tCO2 to the end of the project life-pan of 20 years (ie. to 2040). The alternative to sourcing its electricity from the grid is for RBC to invest itself as producer/consumer (a ‘prosumer’) in a new electricity generation plant, using a renewable technology. The two options under consideration are onshore wind turbines versus solar photovoltaic (PV). The construction and management of the preferred option is to be contracted to a private supplier: for the solar option, Sunshine Solar (SS), a local State-based company, and for the onshore wind option, Deutsche Onshore Wind (DOW), a Germany-based multinational company. Both companies have existing operations in the state are considered world leaders in renewable electricity generation and will be paid a project management fee (equal to 10% of, and included in, the estimated fixed operating and maintenance costs in Table 1). In the case of DOW, the full amount of this fee will be remitted to its parent company in Germany. If RBC switches to become a prosumer with one of the renewable options, it will avoid having to purchase any electricity from the grid at the current price and avoid paying the additional carbon charge from 2024 onwards. This will also reduce the amount of electricity generated by the coal-fired power stations by an amount equivalent to the MWh generated by RBC. You are required to undertake a cost-benefit analysis and prepare a report for RBC, comparing the costs and benefits to RBC of sourcing electricity over the next 20 years from either onshore wind- or solar-powered generators, vs continuing with supply from the grid using coal-fired generation sources. Your comparison of the two options should be based on their Levelized Cost of Electricity (LCOE).

a) Base Case
i. Accept/reject project, ranking and preferred option, discussion of results generally
ii. Distribution of costs/benefits among stakeholders within Referent Group
iii. Identify and discuss external costs and benefits of renewable project options
iv. Possibilities for improvement; what can make it more acceptable to stakeholders in RG?

Scenario and Threshold Analysis 
a) Basic sensitivity testing of individual variables with justification (and references if needed)
b) Scenario Analysis (Optimistic/Pessimistic)
c) Threshold Analysis and implications for ranking of options
d) Discussion of other unaccounted costs and/or benefits NOT included in CBA and possible implications for project ranking/choice

Conclusions & Recommendations 
a) Executive summary 
i. Length and style
ii. Introducing the project
iii. Results/findings; sensitivity/scenario/threshold analysis
iv. Overall feasibility of project and preferred option?
b) Conclusion & recommendations
i. Length and style (1- ½ pages)
ii. Recommendations
iii. Base case & options
iv. Implications of Sensitivity and Threshold Analysis
c) General ‘readability’, overall coherence and style

This Case Study assessment has been solved by our Case Study experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.