The idea behind it is that everyone who supplies energy gets paid the same

E.g. it would be unfair to pay wind farms 10p/kWh and gas turbines 20p/kWh when the electricity they supply is the same and fungible

If there was enough grid storage this wouldn't be an issue, but because there isn't, there are always times where we need gas turbines to top up and those turbines won't turn on for less than it costs them, which is a lot

The upside of this is renewables are very profitable and incentivised

If that's the case, doesn't it make a huge amount of sense for the utility to tell the silk incinerator selling it 0.001% of its electricity for 40p/kwh, "Bugger off, we'll buy batteries"? Cutting its overall power costs in half for a tiny operational shift.

You don't actually need the 0.1%. There are easy ways to make it up. There AREN'T easy ways to make up 7%, though.

Simplifying wildly: Electricity producers sell their electricity at auction. They all offer a bid (x Wh at price y), the utility accepts bids from lowest to highest until demand is filled, and then everybody gets paid the highest accepted price to fill demand. Wind and solar pretty much always bid their forecasted capacity at $0, because they have no additional costs between producing and getting curtailed.

So the silk incinerator only gets to sell electricity if demand is extremely high and the utility needs to accept even the highest bid.

Batteries would fix a lot of this, but western nations have extremely long interconnection queues (project waiting to be allowed to be connected to the grid), mostly because of stupid bureaucratic reasons.

The utility will bill the 40p/kWh to its industrial customers (and residential customers on “agile” smart meter tarriffs), and the customers can decide whether they need the power even at 40p, or whether they shut down their bitcoin mine/aluminium smelter/EV charger/floodlights for those two hours.

In the longer term, price spikes like this incentivise the building of batteries - which might be marginably profitable most of the time but profit big time (and help big time) in periods of price spikes.

It is nice that is keeps renewables extra profitable, but if they could price down a bit they could just run fossil fuels out of the market entirely… so, it doesn’t seem like a great favor to them.

OTOH treating all units of energy “fairly” ignores the added value of dispatchable generation, so it doesn’t really seem fair at all.

On the gripping hand, if pricing was set by the market, customers could be incentivized to help fix the intermittence problem by making their loads dispatchable, which seems like it would be an all-around win…

> if they could price down a bit they could just run fossil fuels out of the market entirely

What do you propose we do when the intermittent sources don’t provide enough energy and all the other power sources have gone bankrupt?

I feel like I discussed that in the second half of my post, so I’m not sure how to respond to this question.

How would users make their demands dispatchable? The demand is the demand. The supply has to match

It depends on the specific load, dishwashers can be configured to run when the price drops a bit, heating can be configured to allow your house to get a little colder, and if the market provides enough incentive, adding insulation will become economical.

I mean it is a big pile of interests that needs to be optimized. One option is to expose it to the market and let the supply and demand optimization process have a go at it.