Price is a function of supply and demand. Supply was massively reduced by sanctions and war, so price goes up, simple as that.
>This is price gouging.
If electricity producers had enough pricing power to set the price to whatever they wanted without competition they'd already have done so years ago. Again, price is a function of supply and demand, cost of production is only one component.
In a monopoly situation, yes. Luckily there is competition, and at this level their competition has a great incentive to ramp up capacity. Which, frankly, is going to make them ramp up production so they can capture a bigger piece of the market when the situation isn't quite as ridiculous as it is today anymore.
It instead makes sense for me to buy a new second panel for $100 after 10 days and then I can make $20 a day, then 5 days later buy a 3rd.
30 days into this I'll have made $45, and be making $30 a day instead of $10.
Saying "the highest cost available at any moment sets the price for everyone" is misleading, it's also the lowest marginal price required to satisfy the total load required to supply the market.
The margin price in that market is the marginal cost of a GW hour by for the last GW that satisfies the load required (demand).
But this is not true. Price is a function of whatever price the seller sets. Look at the actual circumstances rather than on mathematical models with no bearing on reality.
Only if customers are willing to buy at that price. Which is only true now because there are no cheaper competitors to turn to, which in turn is because the entire system is operating at capacity.
Over time the high prices incentivizes bringing more power generation and transport online, which is exactly what we are seeing - new/reopened nuclear, coal, and nat gas plants are all planned or coming online across Europe and imports have spiked from places like the US. No one likes high prices but it does incentivize building more capacity that might lose money when prices are low, but make up for that when prices are high. This process doesn't happen over night but sanctions + war (roughly) did. Europe was lulled into complacency by consistent and cheap Russian gas for years.
Also, don't overlook those transport costs. Networks across all energy types are severely constrained and underinvested in. Doesn't matter how cheap you can produce energy if you can't get it to your customers cheaply.
In other words, the price is the marginal price: at the very edge. What is the highest price consumers want to pay for X amount of electricity. You should split it up: say price of electricity is 5$. That means:
Electricity produced at 1$: sells for 5$
Electricity produced at 2$: sells for 5$
Electricity produced at 3$: sells for 5$
Electricity produced at 4$: sells for 5$
Electricity produced at 5$: sells for 5$
Electricity produced at 6$: does not sell, plants get paused
Sometimes that means: Electricity produced at x$: sells for -5$ (I pay you to use it)
Buyers are willing to pay $5 to secure 100GW of power. Sellers are: 80GW Solar at $3 and 20GW Coal at $5.
At 100GW the price is $5 because it's the price that will secure 100GW. If buyers only needed 80GW the price would be $3.
There is only one market price and it's the price that gets the required quantity of power (as you say).
It was the European Commission that designed the integrated electricity market because it was believed that a free market would guarantee low electricity prices for everyone. It seems very naive to believe that this system will function better in the future. For the energy giants it is more profitable to limit supply and jack up prices than to build more capacity.