Marginal pricing, implemented through pay-as-clear auctions, sets the market clearing price where supply meets demand and is the standard mechanism in wholesale electricity markets. It ensures efficient dispatch, optimises the use of cross-zonal capacity and provides transparent price signals that support flexibility and investment. During the 2023 review of the Electricity Market Design, EU institutions confirmed that the current framework functions effectively and should be preserved.
Electricity is a uniform commodity, priced according to supply and demand equilibrium. Marginal pricing ensures least-cost dispatch through the merit-order effect, supports the integration of renewable energy and provides a reliable spot price that underpins forward markets used for hedging and price discovery.
