I ran across this article: Renewables are cheaper than ever – so why are household energy bills only going up?
It is primarily about energy prices in Europe; however, it made it more clear how an increase in Natural Gas costs can increase the cost of power so much even with ever cheaper renewable energy coming online.
Apparently the crux of it is that in an open market energy producers bid to produce power. Grid operators need to ensure there is enough power, so they raise the price paid to everyone at that time period until enough power is being produced. Every producer gets paid that higher rate during that period.
When natural gas prices go up, it means generators using it need to be paid more to make it worth their while to bring their plants online. So all energy sources get paid the higher rate.
I see why the system was set up this way, but it also seems a bit odd. From a consumer’s perspective, why should the price of power from all sources go up when it is only the cost to generate power from one source that has skyrocketed?
It is primarily about energy prices in Europe; however, it made it more clear how an increase in Natural Gas costs can increase the cost of power so much even with ever cheaper renewable energy coming online.
Apparently the crux of it is that in an open market energy producers bid to produce power. Grid operators need to ensure there is enough power, so they raise the price paid to everyone at that time period until enough power is being produced. Every producer gets paid that higher rate during that period.
When natural gas prices go up, it means generators using it need to be paid more to make it worth their while to bring their plants online. So all energy sources get paid the higher rate.
I see why the system was set up this way, but it also seems a bit odd. From a consumer’s perspective, why should the price of power from all sources go up when it is only the cost to generate power from one source that has skyrocketed?
