> Power grids operate like marginal cost markets. Why would I as a consumer buy more expensive nuclear power when abundant renewables are available?

I think this is an incomplete description of the system.

The missing element here is the fact that independently of what an individual electricity customer (private/commercial/..) chooses to do, the government/burocracy still ultimately mandates for grid operators, utilities and power companies to operate their technology in such a way that the grid can remain stable and deliver enough electricity to power (practically) all uses, whatever they might be at a certain point in time, even when renewable generation is at only say 15 % of max capacity.

This makes companies build/maintain (and get paid for) backup powerplants. They're needed and maintained for stability reasons, (pretty much) regardless of their cost of electricity generation per kWh. The market price is not really relevant, since grid stability is hugely more important to everyone (individual persons, businesses, political parties) than spot market price.

> Given the possibility of cheap distributed generation today what will happen if you force nuclear costs on consumers is that they will build local renewable generation and lower their grid utilization.

Applauding cheap distributed generation of fluctuating renewables (note: I'm in favour of their deployment) without mentioning that there are times when they simply don't deliver, so that other (flexible, reliable) sources have to fill in paints an incomplete picture. Without the fossil/nuclear backup plants the spot price would skyrocket to a degree such that everyone in posession of a smart meter and flexible price contract (and withouts state subsidized electricity) would just stop consuming because a kWh might suddenly cost a few $/€.

The market might be the market. But the grid is a technical system and its stability is a parameter which most prioritize higher than cost/kWh, which is why it's a hidden cost, that's not directly attributable to renewables and so as long as the grid cannot deliver 100 % renewables at _all_ times, "cheap renewable electricity", that's cheaper than fossil/nuclear is a somewhat naive take.

Imagine customers getting to choose between 2 different electricity contracts:

A) 100 % renewable electricity; subject to availability; gets delivered according to current generation; if demand exceeds generation, every customer gets curtailed to a fraction of their actual demand, according to their usual consumption so that demand=generation

B) 24/7 electricity; varying percentage of renewables; some nuclear/gas/coal in the mix

How low would you have to set the price/kWh of A relative to B for getting say even just 1 % of customers? 1/5? 1/10?

Now would any company running such a 100 % renewable fleet and offering A contracts have an easy time running their business with economic success, because "renewable generation is so much cheaper than fossil/nuclear"?

Yes, marginal cost/kWh of nuclear/fossil might be higher than wind/solar. The reason is obvious: they provide stability/reliability for the grid, so until the grid is 100 % renewable, 1 nuclear/fossil kWh is simply more valuable than 1 renewable kWh.

What do people do who "build local renewable generation and lower their grid utilization", when their own generation doesn't meet their demand because it's winter? Right, they draw power from the grid, from some gas/coal/nuclear plant.