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... assumption.

The capitalized cost per unit annual production capacity and the degree to which hydro has a premium revenue yield over the unweighted-average prices determines whether and for how that volatile market price path falls below break-even.

So there is a market penetration where hydro shoots itself in the foot under marginal market pricing, but its a higher market penetration, and in the small open economy assumption, its market penetration of the broader regional market.

A closed economy would have a lower threshold before its necessary to adjust the marginal pricing policy to gain the full benefit of hydro potential, though as a closed economy it may also have more freedom to impose a pricing policy tailored to its circumstance.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Mar 29th, 2011 at 01:23:04 PM EST
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