Marginal means the cost of delivering one additional unit of power, typically in megawatts (MW). Wholesale power pricing (in Germany and many other liberalized energy markets) follows certain rules. Three concepts are central to this: In uniform pricing, all units of a certain good in a certain market are sold at the same price. The design of energy markets is a subject of ongoing debate, particularly concerning the choice between the widely adopted Pay-as-Clear (PC) pricing mechanism and the alternative Pay-as-Bid (PB). Variable green tariffs offered by electricity suppliers through the country’s new color-coded tariff system, introduced at the beginning of the year to simplify price comparisons, are expected to rise sharply, by as much as 35 percent compared to current prices, when announced in the coming days. Marginal pricing method (also known as a ‘pay-as-clear’ market), the EU electricity market is based on (more specifically, in the day-ahead auction and balancing energy markets), means that everybody receives the same price for electricity at wholesale level. Based on the uniform marginal clearing price in the capacity market, the marginal clearing price of different power generation resources is corrected by using the cost ratio factor, which includes the difference in the cost structure of power generation resources.
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