>Once EU finally gets rid of the ridiculous pricing model where spot prices are dictated by the most expensive energy source (usually, gas), we might have a situation where grid costs exceed the cost of energy itself.

Why is it ridiculous? From a pure mathematical economics point of view it's genius I think. It means energy producers can just set their price at production price, knowing they will get the best deal that way and thus don't need to speculate on the electricity prices. It makes electricity as cheap as possible when it's abundant and expensive when it's not, also incentifying users of electricity to shift their consumption.

What's a better way of doing it?

▲ 3 hours ago | parent | next [-]

[deleted]

▲ nandomrumber 9 hours ago | parent | prev [-]

Any way that is more fair for the end user.

Why should a solar generator, who has virtually zero inputs, demand the same rate as a gas or coal generator who’s costs are dominated by inputs?

Where’s the promised savings to the end user? That’s right, there aren’t any.

And people bang on about solar being cheaper.

No it isn’t.

Solar electricity is the same price as gas peaker-plant electricity. Everywhere I’ve looked, same story.

And there’s no solar power without gas.

▲ pantalaimon 8 hours ago | parent | next [-]

If you can make a great profit from solar, you are incentivised to build more of it for an even greater profit.

Soon there is so much solar that you don't need the expensive gas most of the time.

▲ manmal 3 hours ago | parent | next [-]

> Soon there is so much solar that you don't need the expensive gas most of the time.

In the EU (winters with weak solar radiation) this only works if you can store power over multiple months. Getting rid of gas means purchasing and maintaining a giant amount of batteries. Slow storage won’t save you from outages during peaks. We do have very cheap power from solar, during the hot months. In winter, its wind and offshore turbines that are prevalent, but they are as unpredictable.

So, solar and wind power is trivial. Storage is the issue. And consumers will pay that storage, in both grid cost, and spot prices.

I don’t understand why peak producers should dictate prices for all levels of service. Make an exception for them that’s adequate, like a second peak market, and done? Why should a solar producer (who doesn’t buffer!) get 3x the price only because Russia turns up gas prices and the big producers start panic buying expensive gas futures, poisoning their whole lineup in the process? Solar producers just pump whatever’s coming out of their panels into the market, with no regard for grid stability.

	▲	CorrectHorseBat 2 minutes ago \| parent [-]
		Right now providing grid stability is maximally rewarded because you get paid a lot when it's needed and little when there's a lot of electricity available. Storage providers can use this spread to make money and create grid stability. I'm not sure what you mean by second peak market? Let me turn around the question, why should a gas plant get more for its electricity when it's indistinguishable from solar electricity?

▲ nandomrumber 8 hours ago | parent | prev | next [-]

Isn’t that a self defeating loop.

Great profit to be had from solar because of expensive gas.

Let’s put aside that this isn’t good for the end user, as it openly admits the whole point of solar is great profit, rather than savings for the end user.

Soon there’s no need for the expensive gas.

Where’s your profit margin not?

▲ istjohn 7 hours ago | parent | next [-]

> Let’s put aside that this isn’t good for the end user, as it openly admits the whole point of solar is great profit, rather than savings for the end user.

The whole point of capitalism is that in a well-regulated, open, competitive market, an ecosystem of companies pursuing maximum profit drive down each other's profit margins as they compete for a limited pool of consumers. In other words, it is precisely the profit motive that creates savings for the end user.

▲ glenstein 6 hours ago | parent [-]

Exactly. The same principles that apply for solar energy are already in place for natural gas and for every other form of energy and the fundamental logic of markets is that there's a price point consumers will pay that's also profitable for the company.

That didn't newly become an issue for the first time once solar entered the picture. There should be a word for this type of argument where people relitigate settled principles because they're discovering them for the first time.

▲ jabl an hour ago | parent | next [-]

Even more generally, this applies to commodity markets. Price of potatoes is x EUR/kg, set by supply and demand. If some farmer can produce potatoes for 0.1x EUR/kg, they get to make a good profit.

Now electricity wholesale markets are an artificial construct, but it has been designed to mimic other commodity markets in that the producer on the margin sets the price.

▲ nandomrumber 2 hours ago | parent | prev [-]

It’s not like I’m discovering the concept for the first time.

I just think when people say things like “solar is cheaper than gas” they should say for who.

Solar is cheaper than gas for the capitalist.

And there’s no guarantee the capitalists savings will ever be passed on to the consumer.

In my market, Australia, the energy retailers are regulated to increase prices once a year. Increase prices. Never a saving for the retail customer. They’ve worked out that can skip all that messy market bullshit and just regulate annual increases.

Good work if you can get it.

▲ defrost 2 hours ago | parent [-]

> In my market, Australia, the energy retailers are regulated to increase prices once a year. Increase prices. Never a saving for the retail customer. They’ve worked out that can skip all that messy market bullshit and just regulate annual increases.

Have you actually read the regulation?

  The AEMC said the new rules were in response to requests from Australia's energy minsters. They will:

    * prevent retailers from increasing prices more than once a year
    * ban excessive charges like late-payment fees for all retail contracts
    * ensure all consumers are entitled to a fee-free payment method
    * prohibit retail fees for vulnerable consumers
    * ensure vulnerable Australians are receiving their retailer’s best offer
    * prevent retailers from charging more than the standing offer price if the customer's initial offer changes or expires. This will protect customers from paying higher prices for their loyalty.

  The rules to improve consumer confidence in retail energy plans will come into effect on 1 July 2026. Those that assist hardship customers take effect from 30 December 2026.

There is a difference between

A) regulation that forces a price rise once a year.

and

B) regulation that stops more than one price rise (if any) in any year.

▲ glenstein 6 hours ago | parent | prev [-]

If solar is cheaper to produce (which it often is), there's room for undercutting natural gas and room for profit, a mutual benefit to customers and the solar industry where only natural gas loses.

▲ thaumasiotes 4 hours ago | parent | prev [-]

> Soon there is so much solar that you don't need the expensive gas most of the time.

Unless it's night. Or, possibly, unless you have enough battery capacity to store the entire nighttime supply during the day.

▲ eldaisfish 8 hours ago | parent | prev [-]

comments like this really show that many people with strong opinions do not understand how the electricity grid, electricity markets or electricity economics work.

Electricity is priced at the edge entirely because demand must match supply at all times. You either meet all electric demand or someone will go without power. This is why marginal pricing exists and this is why the most expensive generator is always the last to be accepted. This is why electricity at night is cheaper that during the day.

Please, if you do not understand what you are talking about, it's ok to just say that you don't know. Don't spread misinformation like this.

	▲	latentsea 6 hours ago \| parent [-]
		> Electricity is priced at the edge entirely because demand must match supply at all times. You either meet all electric demand or someone will go without power. There's also more to it than just that. Supply-demand imbalance affects the frequency on the grid. Too high or too low frequency damages the turbines in the base load power plants, and they will shut down to avoid damage if the frequency goes too far out of range. Hence, too little or too much power actually causes grid collapse. Solar actually has to be managed a lot more carefully than people realise.