A Wholesale Price per Megawatt-hour Against the Rate on Your Bill
Electricity is traded in one unit and sold to households in another. Day-ahead auctions clear in euros or dollars per megawatt-hour, corporate power purchase agreements are signed per megawatt-hour, and news coverage of a price spike quotes the same unit. The tariff on a domestic contract, meanwhile, is written in cents per kilowatt-hour. Anyone trying to work out whether a headline market price is good or bad news for their own bill is comparing two numbers that differ by a factor of a thousand before any of the interesting differences begin.
Why the Two Numbers Never Match
A Dollar per MWh Is a Tenth of a Cent
Most of a Retail Rate Is Not Generation
One Clears Every Hour, the Other Once a Year
Putting a Market Headline Next to Your Own Tariff
The point of the exercise is rarely the unit itself — it is deciding whether a quoted price would change what you pay. Four steps get there.
Convert the quantity, then move the decimal
Enter 1 in the megawatt-hour field and the thousand kilowatt-hours confirm the scale. From there a price divides by the same thousand: a figure quoted per MWh becomes dollars per kWh, and multiplying by a hundred turns it into the cents your contract uses.
Scale it to a month you recognise
A price only means something against a quantity. Take the kilowatt-hours from a recent statement — 900 is a common monthly figure for a household with no electric heating — and multiply. That turns an abstract market number into a currency amount on a bill.
Subtract the two and name the gap
The difference between the retail rate and the wholesale price is not profit; it is network charges, levies, losses and margin. Writing it out as its own number per kilowatt-hour makes it obvious how little of a bill actually tracks the market.
Run the swap when the quote arrives per kilowatt-hour
Solar export rates, EV tariffs and community energy offers are usually published in cents per kilowatt-hour. The swap control puts kWh on the left so those offers can be restated per megawatt-hour and set beside a market curve.
Wholesale Prices, Their Cents per Kilowatt-hour and a Monthly Bill
Each row takes a price per megawatt-hour through to what 900 kWh of household consumption would cost at that rate alone, before any network charge, levy, tax or margin is added.
| Market situation | Price per MWh | Cents per kWh | 900 kWh at that price |
|---|---|---|---|
| Negative price, sunny windy midday | −$20 | −2.0 ¢ | −$18.00 |
| Zero-price hour, surplus renewables | $0 | 0.0 ¢ | $0.00 |
| Overnight off-peak | $25 | 2.5 ¢ | $22.50 |
| Typical annual average | $50 | 5.0 ¢ | $45.00 |
| Evening peak, gas on the margin | $80 | 8.0 ¢ | $72.00 |
| Cold snap, tight reserve margin | $120 | 12.0 ¢ | $108.00 |
| Scarcity hour | $250 | 25.0 ¢ | $225.00 |
| Retail tariff for comparison | $160 | 16.0 ¢ | $144.00 |
The last row is the one that reframes all the others. A household paying 16 ¢/kWh is on the equivalent of $160/MWh, which sits above every ordinary market condition in the table and is only overtaken during genuine scarcity. That is not a scandal: the retail rate has to cover the wires, the meter, the levies and a full year of hedged supply including the expensive hours, whereas the wholesale figure is one hour's marginal cost of generation and nothing else.
Working Between the Market Unit and the Meter Unit
Any Currency, Because Only the Thousand Moves
Euros per MWh, dollars per MWh and pounds per MWh all reduce to the same shift of the decimal point, so a European day-ahead figure and a US tariff can be lined up without touching an exchange rate first.
A Clean Number for the Tariff Comparison Sheet
The copy control hands over digits with no unit and no thousands spacing attached, which is what a spreadsheet needs when several offers are being ranked in one column.
Turn an Export Rate Back Into a Market Price
Feed-in and export offers are advertised per kilowatt-hour. Reversing the fields restates them per megawatt-hour, the form in which they can honestly be compared with what a generator is being paid.
A Household's Monthly Kilowatt-hours From an Annual MWh
Consumption benchmarks are often published in megawatt-hours per year. Entering one returns the kilowatt-hours a statement would show, so a national average can be checked against your own twelve bills.
Price Questions Between the Market and the Meter
The day-ahead auction cleared at €85/MWh — what is that per kilowatt-hour?
8.5 cents per kilowatt-hour, or €0.085/kWh. Divide the megawatt-hour price by ten and the answer is already in cents, which is the fastest sanity check there is on a market headline. Treat it as a wholesale energy cost for one delivery hour and nothing more: it excludes network tariffs, taxes, VAT, capacity payments and the supplier's cost of hedging, so it is a floor under the retail price rather than an alternative to it.
Why is my 16 cent tariff roughly triple the wholesale price?
Because generation is only one line in the stack. A rough split for a typical household unit rate puts energy at a third, network charges at a quarter to a third, policy and environmental levies at a tenth to a fifth, and the rest in metering, losses, supplier operating cost and margin. Network losses alone add several per cent, since every kilowatt-hour delivered to a home required more than a kilowatt-hour generated. The proportions differ sharply by country, and in markets with heavy renewable-support levies the energy component can be well under a third.
Prices went negative yesterday — will that show up on my bill?
Almost never directly. Negative wholesale prices happen when inflexible or subsidised generation exceeds demand and it is cheaper for a plant to pay to keep running than to shut down and restart; a few midday hours of that in a sunny, windy spring are now routine in several markets. On a fixed tariff the effect is invisible, and on a standard variable tariff it is diluted into a whole year of purchasing. Only a genuinely dynamic or half-hourly contract passes an individual hour's price through, and even then network charges and levies stay positive, so the delivered rate rarely goes below zero.
A corporate PPA is signed at $45/MWh — is that cheap?
It is 4.5 ¢/kWh for the energy, fixed for ten or fifteen years, which is why the figure looks so far below a retail rate. What it is not is a delivered price: the buyer still pays network charges, levies and a supplier for balancing, and a pay-as-produced contract exposes them to the difference between when the plant generates and when they consume. Compare a PPA against the wholesale forward curve, not against the tariff on a household bill, and treat the gap to that tariff as the cost of everything a PPA does not include.
Why do generators talk in megawatt-hours when bills are in kilowatt-hours?
Because each side picked the unit that keeps its numbers a sensible size. A market where the smallest tradeable block is a megawatt for an hour would be quoting six-decimal prices if it worked in kilowatt-hours, while a household using a few hundred units a month would be reading three decimal places on every bill line if it worked in megawatt-hours. The units are separated by exactly a thousand and nothing else, so both descriptions of a price are equally exact — the confusion is purely one of scale, and it costs people a factor of ten in mental arithmetic all the time.
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