If there weren’t marginal pricing, nobody in the private industry would build more wind farms or submarine power lines or battery capacity - which are lucrative because they produce peak-time power cheaper than imported gas — and these are the things that will drive power prices down eventually.
Whether it is better or not, I have no idea. One could probably see an argument for allowing renewables to price themselves below the sustainable rate for petrochemical based fuels—let them outcompete based on price. Of course that gives them less money to reinvest.
On the other hand, power grids are never entirely market based; the grid needs some dispatchable power for stability sake, and it is hard to get consumers to express their tolerance of power outages in terms of how much extra they’ll pay to keep unused plants in reserve…
E.g. it would be unfair to pay wind farms 10p/kWh and gas turbines 20p/kWh when the electricity they supply is the same and fungible
If there was enough grid storage this wouldn't be an issue, but because there isn't, there are always times where we need gas turbines to top up and those turbines won't turn on for less than it costs them, which is a lot
The upside of this is renewables are very profitable and incentivised
You don't actually need the 0.1%. There are easy ways to make it up. There AREN'T easy ways to make up 7%, though.
So the silk incinerator only gets to sell electricity if demand is extremely high and the utility needs to accept even the highest bid.
Batteries would fix a lot of this, but western nations have extremely long interconnection queues (project waiting to be allowed to be connected to the grid), mostly because of stupid bureaucratic reasons.
In the longer term, price spikes like this incentivise the building of batteries - which might be marginably profitable most of the time but profit big time (and help big time) in periods of price spikes.
OTOH treating all units of energy “fairly” ignores the added value of dispatchable generation, so it doesn’t really seem fair at all.
On the gripping hand, if pricing was set by the market, customers could be incentivized to help fix the intermittence problem by making their loads dispatchable, which seems like it would be an all-around win…
What do you propose we do when the intermittent sources don’t provide enough energy and all the other power sources have gone bankrupt?
