Market design - is it time to move away from marginal pricing?
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Description
In this episode, Tom and Emma dive into electricity market design. Marignal pricing is a key concept in electricity market design, with the most expensive unit needed to meet demand setting the price for all generators.
They explain Marginal Pricing and ask whether in a world of rising gas prices and increasing proportions of renewables the marginal pricing principle is still fit for purpose. Could a two phase market work, with a separate 'green power pool' so that pricing is no longer set by expensive fuelled generation? How would this work, and what would the implications be?
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