> The gas plants could be 1% of given moment, yet still set price

Makes sense. Since no one would build that last 1% (or then, last 10%) of needed capacity due to it being wildly unprofitable. Then you are dealing with rolling blackouts or even worse.

The cost of a watt is not fungible. Reliable electricity is worth many multiples more than an unreliable grid no one can rely on being there when they need it.

This is a very sensible way to structure an electricity market. It’s got to be set at the marginal price, otherwise you mess up incentives of cheaper producers.

It's not like the price is set for the whole year, though. The price is set each half-hour, so it does matter what percentage of the time the gas peaker plants are necessary to supply the grid. This makes the effect of renewables on prices quite nonlinear: if they can never supply 100% of the grid, then they have zero effect on the average wholesale price. But going from 0% to 99% is a large part of the hurdle, then the transition from 99% to 105% will have a very large effect on the pricing (of course, given the variable nature of renewables, this will get blurred a bit more: currently the UK grid is entirely renewables about 1% of the time. But doubling the renewable capacity will raise that percentage to a lot more than 2%).

Sure, it's a marginal price. It is surprising to me that HN struggles to understand marginal pricing, it makes me more likely to assume when I see such people unhappy with taxation that they probably also don't understand marginal taxation.

Marginal differences have a cliff effect, which is one of the things US Republicans are worried about in the event Trump isn't able to subvert or abolish entirely this year's elections. If you've gerrymandered every seat so that you'll win by 3-5% and then your support collapses 10% across the board then you lose all those seats, not 10% of them. Ouch.

For that 1% in reality it's probably not quite the case, my understanding is that most of the gas plants pay a significant price in terms of efficiency loss and wear on the turbine, for restarts, so e.g. make 10MW for an hour, switch off for an hour, then make 10MW for an hour is 20MWh produced, but incurred a stop-start. The 20MWh might equate to £1000 of gas burned, but the stop-start has an effective price of £500. So you need to charge £75 per MWh to break even. Or, you could sell for £60 per MWh, deliver 10MWh for all three hours, 30MWh, £1500 of gas burned, no stop-start overhead, your overall costs were the same but you got more profit because 30 x £60 = £1800 instead of 20 x £75 = £1500.

That is exactly what I wrote. Gas plants being at 1% implies that there is no cheaper source with available capacity. Why should anyone sell electricity for less then?

> gas plants could be 1%...

This is only true if demand is completely inelastic, which isn't the case.

So if I offer my services providing electricity through a bicycle transformer for the cheap cheap price of $1000 per kWh does that mean everyone has to pay that price.