Marginal pricing
Client: Eurelectric
Published: 2026
The policy debate about electricity market design, marginal pricing, and the “Merit Order” has resurfaced in Europe. Policymakers concerned about electricity prices have proposed state interventions into wholesale markets, resembling the “Iberian Mechanism” and a “market split” between renewable and fossil generation. For the industry association Eurelectric, we produced a memorandum that presents data on European price levels, explains the mechanics and merits of marginal pricing, and evaluates the proposed interventions — concluding that markets are functioning as designed and that the proposals would distort prices and undermine investor confidence.
Prof. Dr. Lion Hirth
hirth@neon.energy
+49 157 55 199 715
