After working on energy policy as both a Virginia legislator and Director of the Virginia Department of Energy, one thing I’ve learned is that electricity markets are often misunderstood. Wind and solar don’t have fuel costs. So why isn’t electricity dramatically cheaper? Because wholesale electricity markets don’t pay generators based on their individual costs. They pay based on the market-clearing price, which is usually set by a natural gas plant needed to meet demand. That means wind and solar generators often receive the same price per megawatt-hour (MWh) as natural gas generation, even though their operating costs are lower. I explain how this works, and why it matters for energy policy debates, in my latest column in the Virginian-Pilot. For those who may encounter the paywall, I’ve included the article here. The link to the Virginian Pilot is: https://lnkd.in/e9tBwaxm
After working on energy policy as both a Virginia legislator and Director of the Virginia Department of Energy, one thing I’ve learned is that electricity marke
Glenn Davis
Verified Source
2026-03-15
2 min read
Source
Credit: Glenn Davis
**Key Insight:** The article discusses the challenges faced by natural gas generators in the electricity market, particularly in Alberta, where they are often paid based on the market-clearing price rather than their individual costs. This can lead to a situation where wind and solar generators receive the same price per megawatt-hour (MWh) as natural gas generation, despite their lower operating costs.
GasGx Editorial Insight
**Key Insight:** The article discusses the challenges faced by natural gas generators in the electricity market, particularly in Alberta, where they are often paid based on the market-clearing price rather than their individual costs. This can lead to a situation where wind and solar generators receive the same price per megawatt-hour (MWh) as natural gas generation, despite their lower operating costs.
**Body Paragraph 1: Analysis of the market/tech situation**
The article highlights the importance of understanding the electricity market's pricing structure when it comes to renewable energy sources like wind and solar. It points out that these generators often face challenges in securing fair compensation for their services, which can have significant implications for their profitability and long-term viability.
**Body Paragraph 2: The specific operational implication**
For natural gas generators, this issue can have a direct impact on their bottom line. If they are not adequately compensated for their services, they may find it difficult to compete with other generators in the market, leading to reduced profits or even closures. Additionally, this can create a disincentive for investors and businesses to invest in renewable energy infrastructure, as they may perceive it as a risky venture.
**GasGx Take:** To address this issue, GasGx offers a range of solutions that can help natural gas generators better understand and navigate the electricity market. One solution is the "GasGx LCOE Calculator," which allows generators to accurately forecast their levelized cost of energy (LCOE) over time. This helps them make informed decisions about when to invest in new technologies or expand their operations. Another solution is the "GasGx Smart Monitoring System," which provides real-time data on generator performance and fuel consumption, allowing for predictive maintenance and optimization of operational costs. Finally, GasGx also offers a range of compliance tools that can help generators stay compliant with regulations and ensure they are paying fair prices for their services.
**Recommended SEO Tags:** "Alberta TIER compliance", "3MW Gas Generator ROI", "Electricity Market", "Renewable Energy", "Natural Gas Plant"
By offering these solutions, GasGx can help natural gas generators better understand and navigate the complexities of the electricity market, ultimately helping them to remain competitive and profitable in an ever-changing landscape.
**Body Paragraph 1: Analysis of the market/tech situation**
The article highlights the importance of understanding the electricity market's pricing structure when it comes to renewable energy sources like wind and solar. It points out that these generators often face challenges in securing fair compensation for their services, which can have significant implications for their profitability and long-term viability.
**Body Paragraph 2: The specific operational implication**
For natural gas generators, this issue can have a direct impact on their bottom line. If they are not adequately compensated for their services, they may find it difficult to compete with other generators in the market, leading to reduced profits or even closures. Additionally, this can create a disincentive for investors and businesses to invest in renewable energy infrastructure, as they may perceive it as a risky venture.
**GasGx Take:** To address this issue, GasGx offers a range of solutions that can help natural gas generators better understand and navigate the electricity market. One solution is the "GasGx LCOE Calculator," which allows generators to accurately forecast their levelized cost of energy (LCOE) over time. This helps them make informed decisions about when to invest in new technologies or expand their operations. Another solution is the "GasGx Smart Monitoring System," which provides real-time data on generator performance and fuel consumption, allowing for predictive maintenance and optimization of operational costs. Finally, GasGx also offers a range of compliance tools that can help generators stay compliant with regulations and ensure they are paying fair prices for their services.
**Recommended SEO Tags:** "Alberta TIER compliance", "3MW Gas Generator ROI", "Electricity Market", "Renewable Energy", "Natural Gas Plant"
By offering these solutions, GasGx can help natural gas generators better understand and navigate the complexities of the electricity market, ultimately helping them to remain competitive and profitable in an ever-changing landscape.
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