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by MattPalmer1086
85 days ago
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This is a completely normal way to price energy. It's called marginal pricing; price is set by the most expensive energy required to fill demand. The idea is that on some schedule (e.g. each hour) you use the cheapest forms of energy you can to meet demand, but the final price is set by the most expensive one you had to use. This means that the cheaper forms of energy (i.e. renewables) make more money (which increase their profitability and can be reinvested). Obviously though we need better storage if we rely on renewables or we are almost always going to have to use fossil fuels at some point. Whether there are better models, I will leave to people who know more than I do, but it is certainly a very common way to do this. |
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It is fundamentally how the grid works. You can bring it down to a singular household or company level to see the raw incentives:
Why should a household or company with solar and storage buy expensive grid based electricity when their own installation delivers? They don't.
Why should this household or company not for example charge their battery on their battery when the price is low and sell/use it when the prices are higher?
Why should this household's or company's neighbors buy expensive grid electricity rather than the surplus of renewables and storage? They don't.
With the distributed electricity generation renewables enable monopolized grids no longer function. Because consumers have a choice and can vote with their wallet.