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by jahnu
102 days ago
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A very fair question and the answer is complicated. Production costs and transmission costs are separate. Also demand changes the market rate. And even if renewables are cheaper to produce in a market usually the highest price regardless of source sets the price. This is to incentivise the cheapest production methods to be invested in. It’s a massive topic and I encourage everyone to go and dive into it. It’s endlessly fascinating and also one of the really positive stories in the world right now which can help balance your emotions in a sometimes depressing world. At least for me it does. |
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It's also just a rule of economics. The price is set at the cost of the most expensive production necessary to meet demand.
So if solar could fulfill 100% of energy demand, price would be the cost of solar, and any other more expensive generation would either lose money, shut down or idle.
But if we shut down or idle those today we wouldn't have enough electricity, so the price rises until the more expensive plants can stay open and demand is met.