Discussion
As the load factor of a power plant increases, the cost per kWh of energy generated
Answer: B
As the load factor increases, the cost per kWh decreases.
The cost of generation has a fixed part (interest and depreciation on the plant, which depends on its capacity) and a running part (fuel, which depends on the energy generated). A higher load factor means the same plant produces more energy over the year, so the fixed charges are spread over more units and the cost per unit falls.
The fuel cost per unit stays roughly the same, so there is nothing to make the overall cost rise, and it does not stay unchanged because the fixed cost per unit falls.
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