Correct Answer - Option 2 : Maintenance cost
Concept:
Running or operational cost of the power system:
- The concept of the running cost is quite simple. It solely depends on the number of units produced or generated.
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In a power generating plant, the main operational cost is the cost of fuel burnt per unit of electrical energy generation.
- The cost of lubricating oil, maintenance, repairs, and salaries of operating staff are also accounted for the operating cost of the plant.
- Since these charges are proportional to the number of units generated. For generating more units of electrical energy the required running expenditure is more and vice versa.
Capital cost:
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Initial cost or fixed cost is essentially capital costs and land.
- Fixed cost is the cost that is independent of max demand and units generated.
- The fixed cost is due to the annual cost of a central organization, interest on the capital cost of land, and salaries of higher officials.
Explanation:
Equipment cost, land cost, and building cost are the part of capital cost whereas maintenance cost is the part of running cost.
