From the BBC:
The government plans to move nuclear and renewable electricity generators to lower price contracts to cut bills, Prime Minister Liz Truss has said.
"Renewable and nuclear generators will move on to contracts for difference, to end the situation where electricity prices are set by the marginal price of gas," Truss told Parliament.
The price paid to these companies is often set by the most costly generator. That is currently hugely expensive gas...
I thought the govt sold off the National Grid in 1995, so why they are now getting involved escapes me.
And why anybody - government or private - would sign up to such terms is a mystery to me. What's wrong with just setting a price of Xp per MWh (which will of course vary by time of day and seasons of the year) and buying from anybody willing to sell at that price? If that means paying France for their spare nuclear, so what?
Somebody who does these calculations for the National Grid once tried to explain it to me and had my head spinning. I am aware that we - as a society - want to have some slack or over-capacity in the system (electricity being as fundamental as it is; we could go a few days without mains gas, rubbish collection or the NHS, but not without leccy), so we have to pay generators simply for having things on stand-by. And we need a mix for security - renewables vs fossil vs nuclear; and domestic vs imported equipment and fuel, so better to err on the side of renewable/domestic, even if that means slightly higher prices (quite how much higher is a judgment call).
At least it explains why domestic prices for electricity went up so much. I thought - wrongly as it turns out - that the National Grid would simply buy much less electricity from the high-cost generators (using gas) until they have sorted themselves out and more from other sources.
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