I believe there is something of the kind, that the price of electricity just matches the highest production price, since you cannot differentiate which electricity comes from where in a grid. Si even if you have cheap renewable/nuclear energy, costs may rise if you have to use ‘traditionnal’ power plants. Im not sure of the details, i just heard the mechanism being explained once or twice.
It is called marginal pricing the wholesale electricity market uses which determines the spot price of electricity. It is based on the most expensive form of generation, typically gas, needed to meet demand regardless of how little is required. So here in the UK if 99% is generated by low cost renewable and only 1% is generated by expensive gas it all gets priced at the rate for the gas. Absolute madness when you live in a nation like the UK where all electricity retailers are getting their power from one national network operator.
I believe there is something of the kind, that the price of electricity just matches the highest production price, since you cannot differentiate which electricity comes from where in a grid. Si even if you have cheap renewable/nuclear energy, costs may rise if you have to use ‘traditionnal’ power plants. Im not sure of the details, i just heard the mechanism being explained once or twice.
It is called marginal pricing the wholesale electricity market uses which determines the spot price of electricity. It is based on the most expensive form of generation, typically gas, needed to meet demand regardless of how little is required. So here in the UK if 99% is generated by low cost renewable and only 1% is generated by expensive gas it all gets priced at the rate for the gas. Absolute madness when you live in a nation like the UK where all electricity retailers are getting their power from one national network operator.