Providing a Model for Calculating Short Run Marginal Social Cost of Electricity Generation in Thermal Power Plants: Empirical Evidence from Two Isfahan Power Plants

The aim of this study is to calculate the marginal private and social costs of two thermal power plants in Isfahan region for a particular day in January 2010. For this purpose a nonlinear planning model with linear constraints has been used. The objective function (social cost) which is a twofold objective function is calculated by the summation of variable costs and external costs of power plants in the above mentioned region. The results of minimizing the objective function of private cost and also minimizing objective function of social cost indicate a significant difference between marginal social cost and marginal private cost. This difference is considered as marginal external cost in peak hours of electricity consumption and has had an obvious increase to the off-peak hours of electricity consumption in the region of the study. Taking into account the social costs of electricity generation, green power generation technologies can compete with thermal power plants.