4 ms·

in the UK the price everyone pays is set according to the marginal price essentially this means if there's one milliwatt of gas on the grid: everyone pays the

by blibble 9mo ago

in the UK the price everyone pays is set according to the marginal price essentially this means if there's one milliwatt of gas on the grid: everyone pays the gas price as a result consumers see very benefit from renewables (but the renewable generators are making out like bandits)

julosflb 9mo ago
Yes that's sound weird but this is to make sure gas peaker plants which by definition run only a fraction of time can be profitable and be built.
- blibble 9mo ago
  yeah I understand the theory behind the system however the market participants have "adapted" to it https://www.theguardian.com/business/2025/jan/08/two-power-station-owners-to-get-more-than-12m-for-three-hours-of-electricity https://www.theguardian.com/business/2025/jan/08/two-power-s... it works pretty well on a short-term basis but due to the way the system works there's no ability to price-in a long term signal the government is currently consulting on a changes to introduce this mechanism (as is the EU)
  - Arnt 9mo ago
    At a glance, it sounds as if those power stations need to pay for themselves in a few hours per week, and as soon as you get more transmission capacity from Scotland they're dead. Give those constraints, of course they must be expensive if they are to exist at all. Do I misunderstand anything?
zozbot234 9mo ago
This is the right move. The marginal price is the price that balances supply and demand by definition, and this must be the case on the grid at all times, even to the last milliwatt, or you immediately get a Spain situation with cascading blackouts where huge parts of the grid go dark.
- otherme123 9mo ago
  That happened once, and the causes are still unclear/ being investigated. We don't have blackouts unless extreme weather or bad grid sectors (e.g. semi abandoned rural). Also, we have marginal pricing, and we had this pricing for years before the Blackout. And you can have other pricing schemes, for example pay-as-bid, that also balance supply and demand.

by blibble 9mo ago

julosflb 9mo ago

Yes that's sound weird but this is to make sure gas peaker plants which by definition run only a fraction of time can be profitable and be built.

blibble 9mo ago
yeah I understand the theory behind the system however the market participants have "adapted" to it https://www.theguardian.com/business/2025/jan/08/two-power-station-owners-to-get-more-than-12m-for-three-hours-of-electricity https://www.theguardian.com/business/2025/jan/08/two-power-s... it works pretty well on a short-term basis but due to the way the system works there's no ability to price-in a long term signal the government is currently consulting on a changes to introduce this mechanism (as is the EU)
- Arnt 9mo ago
  At a glance, it sounds as if those power stations need to pay for themselves in a few hours per week, and as soon as you get more transmission capacity from Scotland they're dead. Give those constraints, of course they must be expensive if they are to exist at all. Do I misunderstand anything?

zozbot234 9mo ago

This is the right move. The marginal price is the price that balances supply and demand by definition, and this must be the case on the grid at all times, even to the last milliwatt, or you immediately get a Spain situation with cascading blackouts where huge parts of the grid go dark.

otherme123 9mo ago
That happened once, and the causes are still unclear/ being investigated. We don't have blackouts unless extreme weather or bad grid sectors (e.g. semi abandoned rural). Also, we have marginal pricing, and we had this pricing for years before the Blackout. And you can have other pricing schemes, for example pay-as-bid, that also balance supply and demand.