Why is Electricity Still Priced Like Gas… When We Barely Use It on some days?
Why is Electricity Still Priced Like Gas… When We Barely Use It on Some Days? The Curious Case of Expensive Electricity Here’s a statistic that surprises most people: At times, gas can generate as little as ~4% of UK electricity Yet… gas often sets nearly 100% of the electricity price That sounds like madness. But there is a reason — and once you understand it, you might still think it’s madness… just organised madness. The Key Idea: “Marginal Pricing” The UK electricity market works on something called marginal pricing . In simple terms: Electricity is generated from multiple sources: Wind (cheap) Solar (very cheap) Nuclear (steady cost) Gas (expensive) The grid uses the cheapest sources first BUT… the price everyone gets paid is set by the last (most expensive) power station needed And that’s usually… gas A Simple Analogy Think of it like filling a boat: You fill with free rainwater (wind & solar) Then use a hose (nuclear) Finally… you top u...