Basically the cost of electricity should be the average cost of the network's generators. Or, as it is hard to calculate, the operating cost of the most expensive generator we have to put online. Peakers (pulsed coal and gas) are the most expensive to operate, so the price of electricity is based on their costs.
That we use gas and coal for baseload, however, is the dumbest thing EU (and German) legislation put us through.
And so? I need a KW of power for the next hour, I'll buy from whoever will sell it to me at the cheapest price. Why would anyone sell it to me at less than the highest price (gas) - 0.01€? As long as demand is inelastic I believe that it's unavoidalbe that price will settle up to the price of the most expensive unit sold.
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Coz the solar farm cant match supply to demand whereas a gas plant can.
Yes, that's what GP said (or what i understood).
Basically the cost of electricity should be the average cost of the network's generators. Or, as it is hard to calculate, the operating cost of the most expensive generator we have to put online. Peakers (pulsed coal and gas) are the most expensive to operate, so the price of electricity is based on their costs.
That we use gas and coal for baseload, however, is the dumbest thing EU (and German) legislation put us through.
And so? I need a KW of power for the next hour, I'll buy from whoever will sell it to me at the cheapest price. Why would anyone sell it to me at less than the highest price (gas) - 0.01€? As long as demand is inelastic I believe that it's unavoidalbe that price will settle up to the price of the most expensive unit sold.