Electrical Power Economics/Introduction/Intro

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Introduction to Economics of Power Generation

One of the most prominent in the monthly bill of every household is the Electricity bill. In most countries the cost of electricity has seen a steady increase, which has resulted in ordinary people being forced to question the electricity levy system. How is the electricity bill constructed, regulated and justified?


This is the first of 6 lectures that will discuss how the per unit cost of electricity and other economic factors are determined to ensure sustainable electrical energy supply to the modern power-hungry consumer. After this brief introduction, we will look at the expressions for cost of electrical energy and an in-depth discussion of tariffs, formulation and how they are regulated for the overall benefit of the consumer.

Lesson Preview

By the end of this lesson, the student is expected to be comfortable with the following:

  • Definitions in economics of electric energy
  • Cost of electrical energy
  • Depreciation involved in the economics of electrical energy