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When commodity volume remains the same, and demand increases, prices will experience an exponential rise over a relatively short period. This phenomenon, called 'marginal cost effect', is evident in the San Francisco Bay Area housing crisis. In Oakland, California, for example, between 2011 and 2015, the population, driven by the Web 2.0 job proliferation, increased by 10%. However, because of limited housing, property values went up about 66%, and rental rates roughly doubled in this same period.
10% increase in demand, static supply, 100% increase in average rental costs inside two years.
The same is anticipated with the California grid electric, and this threatens to have a serious impact on industrial and agricultural operations, where the power demand is considerable, where there is a substantial cost of operating, and where the profit margins can be small.
We used a marginal cost calculator, putting together 1) the population increase in California with 2) the growing demand for grid electricity, to produce 3) a kWh cost projection. There will be winners and losers in the coming Power Hunger Games.
MBS believes that gas turbines, CHP or cogeneration, will spell the critical competitive advantage for forward-thinking companies. This projection, again, presumes the accuracy of state energy entity's signals about plans to increase grid electric deliverable capacity.
See If You're Indicated For A Gas Turbine
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