A possible alternative to the marginal pricing model could be one based on VWAP; it can still be location based for multiple zones within an area, and the PPAs or CfD could contain an obligation for the RES provider to bid daily with their LCOE. As a result the inframarginal gains would be reduced (as each generator gets their bid) and the market moves to a more fair price for RES (which needs to happen anyways as it is currently very disruptive)
Interesting idea Robert. The obligation to bid LCOE would tackle the criticism levelled at the pay-as-bid (PAB) model, which supposedly encourages gaming because RES generators tend to increase their bids up to what they expect the marginal generator to be. Since they are receiving a CfD or similar support, the regulator has more leverage and could cajole them into certain behaviours.
A possible alternative to the marginal pricing model could be one based on VWAP; it can still be location based for multiple zones within an area, and the PPAs or CfD could contain an obligation for the RES provider to bid daily with their LCOE. As a result the inframarginal gains would be reduced (as each generator gets their bid) and the market moves to a more fair price for RES (which needs to happen anyways as it is currently very disruptive)
Interesting idea Robert. The obligation to bid LCOE would tackle the criticism levelled at the pay-as-bid (PAB) model, which supposedly encourages gaming because RES generators tend to increase their bids up to what they expect the marginal generator to be. Since they are receiving a CfD or similar support, the regulator has more leverage and could cajole them into certain behaviours.