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A comment on Day ahead electricity prices for EU. Parent comment

Re:Day ahead electricity prices for EU by Ekaros on Saturday August 27, 2022 @10:47AM (#32619604)
Also because electricity market is bit special how it operates. Suppliers tell what price they will sell and and then buyer at what price they will buy. And the price for all transactions will be set at highest match of supply to demand.

Because demand side has no upper price limit the whole market price can raise to very high.

Ofc, this ignores cases of own production, futures and so on.

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Re:Day ahead electricity prices for EU by konschubert on Saturday August 27, 2022 @10:56AM (#32619716)
You're describing an auction principle. It's called merit-order.

It is very efficient at creating a transparent market and finding the "natural" market price. The same price that a free and transparent market would converge to.

The alternative are price caps. Which could be considered. But it's a choice between free and non-free markets.

Blaming merit-order is shooting the messenger.

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