The Effects of Technological Change, Experience, and Environmental Regulation on the Construction Cost of Coal-Burning Generating Units

Abstract

This paper provides an empirical analysis of the technological, regulatory and organizational factors that have influenced the costs of building coal-burning steam-electric generating units over the past twenty year. We obtain empirical estimates of economies of scale in construction costs, learning effects associated with utilities and architect-engineers, the costs of environmental regulation, patterns of construction productivity, and cost differences between generating technologies. The analysis is based on a sample of over 400 generating units placed in operation between 1960 and 1980. Information on generating unit availability is integrated with the construction cost evidence to suggest that the abandonment of supercritical technology in the early 1980's is likely to be a consequence of poor operating performance as well as sharply reduced demand expectations rather than a consequence of high construction costs for this technology at large scale. 29 references, 1 figure, 10 tables.