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**Hugh** · 22-07-2025, 18:19

Quote:

Originally Posted by Sephiroth

But heatpumps are expensive and electricity is very expensive. Surely we should use what we have first.

https://www.thetimes.com/uk/environm...=1753200951729

Quote:

What sets the price?

Every half hour, every day of the year, there is an automatic auction. From the electrons that heat your morning kettle to the ones that flow through your bedside reading light, generators place bids for the privilege of supplying you.

Some, such as wind farms, place a low bid — say, 5p per KWh. Once you’ve built a wind turbine, it costs very little to run it.

Some, such as ageing gas turbines, might ask for more. They cost a lot more to run, especially if their job is as a buffer for less windy days.

“If you’re only called up to run a couple of hours a week, you are going to need to charge higher prices to stay functional,” says Iain Staffell, a lecturer in sustainable energy at Imperial College London. So maybe they will bid 20p/kwh.

Then, the energy retailers buy what they need — starting with the cheapest, and going in price order until it has enough. So far this makes sense.

What might make less sense, unless you are an economist, is that the price they pay — called the wholesale electricity price — is set by whichever source is the most expensive. If 99 per cent of the electricity used that half-hour is wind, and 1 per cent is gas, we still pay the gas price for all of it.

This creates a paradox. The proportion of renewables in our energy mix has gone up from 15 per cent a decade ago to 40 per cent today. But even as our grid has decarbonised, the price mechanism has gone the other way. More than 95 per cent of the time, the price is determined by gas.