It seems like only yesterday that everyone was rushing to understand "marginal pricing" in the wake of Russia's invasion of Ukraine in 2022 – and the huge spike in gas prices

Since then, most will have seen this familiar chart on gas setting UK power prices…
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Since then, both the UK govt + EU commission have studied – and then rejected – market-reform alternatives to the marginal pricing model

But gas prices just spiked again and the idea of doing away with marginal pricing is back in vogue

Why? Answer in a chart:
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We've had comments from Ursula von der Leyen, questions in parliament, editorials in the FT etc etc…

But also strong pushback against the idea that marginal pricing is broken, from a group of seven EU member states and also the big industry lobby group, Eurelectric
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In the UK, we've also had some fact-free attempts by opposition parties to link their calls for new North Sea drilling to lower bills, even tho some of them have personally disowned the idea this could work…

Remember this anyone? https://x.com/BBCBreakfast/status/1721438027250028725
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But most interestingly, we're already starting to see power prices decouple from gas through the simple expedient of…burning less gas

The UK and – in particular Spain – show what can happen when you shift away from gas, whereas Italy shows what happens if you don't
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Thanks to Ember for some unpublished data, I made this chart showing the massive shift away from gas-linked power prices in Spain, relative to the increasingly gas-reliant market in Italy

No wonder Italy wants to tackle high power prices!
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