Funny you should ask that. Because of UK’s marginal pricing system that in almost all cases is being dictated by the most expensive one (fossil fuels).
Under the Marginal Pricing model, energy suppliers set prices based on the highest-cost energy source used, which in the UK is gas. Even though energy suppliers may buy cheaper renewable sources first, they must also rely on pricier fossil fuels to meet demand. Therefore, the final price paid by consumers reflects the cost of the most expensive source used.
Feels like we should abolish this system. Not sure why it even exists, as to me the price should be based on the cost. As things stand we are just giving free money to energy companies and worse petrol oligarchs.
I recognize that we will likely always need some fossil fuel energy in the UK to pick up the slack, but why are the savings of investing in renewables not making their way to the consumer?
Funny you should ask that. Because of UK’s marginal pricing system that in almost all cases is being dictated by the most expensive one (fossil fuels).
https://kingsthinktankspectrum.wordpress.com/2024/11/21/why-are-uk-energy-prices-so-ridiculously-high/
Thanks for sharing.
Feels like we should abolish this system. Not sure why it even exists, as to me the price should be based on the cost. As things stand we are just giving free money to energy companies and worse petrol oligarchs.
I recognize that we will likely always need some fossil fuel energy in the UK to pick up the slack, but why are the savings of investing in renewables not making their way to the consumer?
It’s an auction of a commodity, you have to keep paying more until you find someone to provide the last bit. Everyone then gets paid close to that.
The big profits are going to those that invested in renewable energy to be fair though, not to the fossil fuel companies.