To take a simplified numerical example, the annual cost of a peak power plant is 60 000 USD/MW/yr, with a variable cost of 100 USD/MWh. Building one MW of capacity to operate it only one hour would cost 60 100 USD/MWh, which is higher than the value of lost load (20 000 in this example). Therefore it is less costly not to serve this MWh and rely on load curtailment. For 2 hours, the cost would be (60 000+2*100)/2 = 30100 USD/MWh, which is again too costly.