[happymellon]

Unfortunately electricity is priced at the most expensive rate. So wind is significantly cheaper to produce than gas, however since gas turbines are still part of the overall grid we pay gas prices for wind power.

We have the most expensive electricity, and its either going to require complete replacement of gas produced electric or replacement of all contracts. I think I can have a good guess as to what is most likely to happen first.

[tialaramex]

No, the wholesale prices are the most expensive clearing price as otherwise somebody is getting paid less than they agreed and why should anybody participate in a "market" where that happens?

Maybe it's easier to see why this is how it works with physical goods in a model rather than fungible electricity and numbers that make no human sense.

We want to buy 100 oranges.

Alice has 40 oranges, and she's willing to part with them for 60p each

Bob has 18 oranges, he wants 56p

Carol has 36 oranges, wants 70p each (!)

Dave has 60 oranges for only 49p

If we insist on having Alice's Oranges and Dave's Oranges but only paying 49p each for them, obviously Alice is going to be very angry about that, we're stealing her oranges, she didn't agree to be paid this little. Also Bob would likely be somewhat angry, he thought we'd buy his cheaper oranges, and instead we just stole Alice's !

So, what we actually do is we take all Dave's oranges, all Bob's oranges, and twenty two of Alice's oranges, and we pay Alice's price for all 100 of them.

Now, Dave has a lot of power here, because we need 100 oranges which the other orange suppliers couldn't cover without him, he could set his price as high as he likes. So it's important under a system like this to ensure you have lots of suppliers so that nobody gets as much power as Dave has.

Unlike our model orange market, the wholesale electricity market is thirty minutes at a time. So 48 prices per day. So if the wind picks up for a few hours at night, for those hours most likely the clearing price will be set by wind prices, the gas generators stay online (typically better to lose a few quid per MWh to idle at low power than eat the restart cost on those generators although you might want to schedule any maintenance for predicted high wind periods) but the prices are set by wind.

In spring that happens fairly often, might even happen for several days in a row. Mid-winter, not so much.

[happymellon]

> we're stealing her oranges, she didn't agree to be paid this little

What are you talking about. If I walk into shop A and buy an orange for 10p, then walk into shop B and buy an orange for 15p, I didn't steal 5p from shop A.

[tialaramex]

Maybe you need to read more slowly, let's try just the essential two facts

"Alice has 40 oranges, and she's willing to part with them for 60p each"

See? Sixty pence.

"If we insist on having Alice's Oranges and Dave's Oranges but only paying 49p each for them"

We're only paying forty-nine pence for Alice's Oranges.

But Alice's price was eleven pence more - we are stealing from Alice

We're trying to determine a single clearing price, the oranges are just an analogy to make it easier to see why we can't choose the lowest price.

[happymellon]

What you did was take my original comment and try to make it more verbose.

Your "well actually" was argumentative and added nothing.

The solution is to either remove the expensive sources or change how we do the purchasing. Nothing you said changed that.

[tialaramex]

Your original post falsely claims it's the "most expensive rate". It's not, the most expensive rate is higher, often much higher.

What is paid is the clearing rate and I explained why. Fantasies about "changing how we do the purchasing" won't change the facts either.