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It's not gaming the system, it is arbitrage. However, it is pretty terrible for producers unable to exploit price swings. E.g a nuclear plant produces electrici
by bjourne 6y ago
It's not gaming the system, it is arbitrage. However, it is pretty terrible for producers unable to exploit price swings. E.g a nuclear plant produces electricity at a fixed cost and may sell it at a loss when the price is low, but recoups the losses when the price is high. Since arbitrage smooth out the price peaks, it damages nuclear's profitability. One could say that's too bad for nuclear, others (nuclear lobbyists) say that regulation is needed to prevent electricity arbitrage.
- xboxnolifes 6y agoIf the fixed price nuclear uses is too low to be profitable, then it must be raised.
- aquark 6y agoIf nuclear can offer sustained cheaper than average generation then the market would allow a long term fixed price contract — they shouldn’t need to sell their full output at spot rates. Consumers that want predictability could buy on these contracts.