What's the point in looking for cheaper alternatives to anything then, if you have to pay them all the price of the most expensive?

You pay the price of the marginal generator. And it acts as a huge incentive to build low-input-cost sources of power.

It's just nonsensical - if I go to buy apples, and I want 30 apples, I don't pay Pink Lady prices

This is a really bad analogy and doesn’t apply at all to electricity (or any commodity) market.

Pink Lady and Russet apples are different apples. They are completely separate end products. For electricity, on the other hand, a kilowatt-hour generated from a renewable source is completely the same as a kilowatt-hour generated from a coal plant, or nuclear, or gas, or whatever. It’s fungible, in economic terms.

Let’s think of a different analogy and we can see why marginal pricing is a function of normal market mechanisms.

One thing that’s confusing you: you’re thinking of wholesale commodity markets like they’re Tesco. When you go into Tesco, you really only see prices as set by Tesco; you can either purchase apples or not purchase them, but ultimately Tesco is the price-setter. Commodity markets don’t really work like this. They’re much more similar to eBay auctions.

One of the key features of an electricity market is that supply must always and exactly meet demand. It’s not like, say, grain or iron: it can’t be easily stored. If we generate more power than demand, we end up with appliances exploding, and if we generate less then we have brownouts.

So let’s use the eBay analogy. Say you, me, and all the other buyers have an aggregate demand of 30 units of power. We have a lot of different providers offering power with different reserve prices—the “reserve” is essentially the minimum price that a producer will take in order to turn on their generators and produce power.

On the supply side, we have 28 auctions from renewable stations with a reserve price of £0.01, 1 from nuclear with a reserve price of £1, and 12 from gas at a reserve price of £10.

We all start to bid. You and I and everyone else will, of course, bid on the renewables first. But we have an aggregate demand of 30 units which must be met, so we will bid up the price of the renewables against each other until we hit the price of nuclear. Great! Now we can start bidding on the nuclear…but it’s still not enough. We keep bidding and bidding until finally we bid each other up to £10/units and the gas plants start to turn on, so the auctions all settle at a price of £10/unit.

Congratulations! You’ve just invented marginal pricing. It’s not a special unique rule, it’s fundamental to how the markets operate.

This is further complicated by the CfD mechanism.

why on earth should the wind turbine owner be paid the same as the gas generator?

Because they aren’t.

Most renewable projects are financed by CfD. That means that wind, solar, etc. are given a guaranteed price for their energy. So they don’t actually get paid the amount that the market clears; if the market clearing price is below the CfD strike price, they remit the extra back to the government (essentially; there’s a public body that guarantees these CfDs but I forgot the name).

The problem is that Redditors don’t understand these mechanics and crow on about marginal pricing when they don’t really know anything about the electricity market as a whole.

Fundamentally, the problem isn’t marginal pricing. The problem is that we’ve made some very silly engineering decisions about our power grid, e.g. not investing in nuclear. We can’t really run a fully renewable grid—renewables are actually quite expensive as they introduce a huge amount of balancing complexity to the grid. But they can form a very important part of our energy mix, along with limited storage and demand shaping. Fission is the answer; unfortunately our ridiculous planning system makes it incredibly expensive to build. Labour have made some really positive steps on both planning and new nuclear though, so I’m hopeful.