The price of electricity is exploding – but why exactly? To an essential part of the so-called merit order. In this way of calculating the electricity price, the power stations are switched on one by one until the corresponding demand is covered: gradually from the cheapest to the most expensive.
The cheapest central is switched on first, then the second cheapest, and so on, until finally enough power is available. The last connected power plant is therefore the most expensive, currently there are gas plants.
Everyone wants to be the cheapest operator
The costs of the last connected power station are used to calculate the electricity price. This means that the operator of the cheapest power plant has the highest profit. The merit order therefore ensures that every operator strives for the cheapest and most efficient power plants possible.
This speeds up the transition to renewable energy power plants. The disadvantage: if the capacities of the other plants are not sufficient, even a small gas plant will increase the price of electricity, given the current high gas prices.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
