3 ms·

Aren't power prices determined by the most expensive power source (i.e. gas) regardless of the prices of all other power sources? Otherwise nuclear/hydroelectri

by storus 7mo ago

Aren't power prices determined by the most expensive power source (i.e. gas) regardless of the prices of all other power sources? Otherwise nuclear/hydroelectric would be sold for pennies, no?

pjc50 7mo ago
Generally, yes. There's a simple reason why: it stops producers trying to "holdout" in order to drive prices up. Various countries are thinking of changing this to modified auction systems in order to deal with greater and greater disparities between prices.
wat10000 7mo ago
It's not a constant, because you don't always need the most expensive sources. If you have a sunny afternoon where there's enough solar power to cover demand without gas plants, then you don't have to pay gas rates for that time.
mono442 7mo ago
That's true and on top of that the EU heavily taxes CO2 emissions which makes the problem even worse. If not for the EU ETS, they could just go back to burning coal for electricity which is cheap and abundant everywhere.
saltybytes 7mo ago
That's right! It's called "merit order" [0]. Best scenario would be to either decouple the gas price from the price of electricity or get rid of the merit order system altogether. The gas price jacks up the price of kWh by so much that alternative energy providers (wind, hydro, solar,...) are making fortunes! The EU is not interested to change that although Spain and Portugal swolled the penalty for suspending the merit order system. Something I find to be long overdue in other EU countries as well since the elevated price for electricity drives inflation. A lot. [1] [0] https://en.wikipedia.org/wiki/Merit_order https://en.wikipedia.org/wiki/Merit_order [1] https://www.eurelectric.org/in-detail/electricity_prices_explained/ https://www.eurelectric.org/in-detail/electricity_prices_exp...

3 ms·

Aren't power prices determined by the most expensive power source (i.e. gas) regardless of the prices of all other power sources? Otherwise nuclear/hydroelectri

by storus 7mo ago

Aren't power prices determined by the most expensive power source (i.e. gas) regardless of the prices of all other power sources? Otherwise nuclear/hydroelectric would be sold for pennies, no?

pjc50 7mo ago
Generally, yes. There's a simple reason why: it stops producers trying to "holdout" in order to drive prices up. Various countries are thinking of changing this to modified auction systems in order to deal with greater and greater disparities between prices.
wat10000 7mo ago
It's not a constant, because you don't always need the most expensive sources. If you have a sunny afternoon where there's enough solar power to cover demand without gas plants, then you don't have to pay gas rates for that time.
mono442 7mo ago
That's true and on top of that the EU heavily taxes CO2 emissions which makes the problem even worse. If not for the EU ETS, they could just go back to burning coal for electricity which is cheap and abundant everywhere.
saltybytes 7mo ago
That's right! It's called "merit order" [0]. Best scenario would be to either decouple the gas price from the price of electricity or get rid of the merit order system altogether. The gas price jacks up the price of kWh by so much that alternative energy providers (wind, hydro, solar,...) are making fortunes! The EU is not interested to change that although Spain and Portugal swolled the penalty for suspending the merit order system. Something I find to be long overdue in other EU countries as well since the elevated price for electricity drives inflation. A lot. [1] [0] https://en.wikipedia.org/wiki/Merit_order https://en.wikipedia.org/wiki/Merit_order [1] https://www.eurelectric.org/in-detail/electricity_prices_explained/ https://www.eurelectric.org/in-detail/electricity_prices_exp...