For Green Power, Bust Monopoly Power

October 14th, 2009 at 2:29 pm | 39 Comments |

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If Americans are serious about ever truly launching a green energy revolution, they will need to agree to bust up some very entrenched monopolies and special interest groups.

Perhaps the most glaring example of state-sanctioned monopoly is the public utility. You likely have one of your own. Or rather, you have one water utility, one gas utility, and one electric utility. Once upon a time, you had only one phone-service provider as well. It was a monopoly known as AT&T, created and sustained by the government. These monopolies control the generation, distribution, and prices of our most basic necessities.  They are tightly regulated, and their prices are fixed.

Somehow all this government regulation is supposed to protect consumers. But a much better protection would be to give consumers choice. In a free market, consumers would be able to move from one energy provider to the next, much like people do now with cell phones or supermarkets.

Of course, many see this sort of deregulation as a threat. The infrastructure demands are simply too great, the argument goes, the stakes too high. Who would lay all those water pipes and gas lines? And, of course, what about Enron? Won’t those greedy corporations take advantage of people if left to their own devices?

In Texas they found an answer to these questions. Texans can choose their own electric provider, and providers compete heavily for customers. The state lays the power lines – the “natural” monopoly – and then private retailers compete for customers. Customers can go to the Texas Electric Choice website to compare competing electricity retailers, shop rates, and switch to a new provider if they’re unhappy with their current one. This creates competition, and reduces administrative costs. Consumers benefit from lower prices and better service. Likewise, barriers to entry in the energy sector are far lower, allowing anyone with some capital and a business plan to start up their own energy retailer or wholesaler.

Perhaps not surprisingly then, it is Texas, not California, which has the largest installed base of wind generation capacity in the country.  This isn’t just because of all the flat, windy Texas plains either.  It’s because Texans are able to sell their wind energy to competing buyers on the market rather than simply back to their local utility.

Currently most utilities will buy back solar or wind energy at a dictated rate. This may be better than nothing, but it’s hardly likely to inspire a future generation of green entrepreneurs. In a green energy market, people could sell back their energy to the highest bidder. They could even hop on the grid and sell to individual consumers instead of utility companies. What better way to promote innovation and green job growth than to make energy profitable and competitive?

Indeed, the entire green revolution rests on our ability to put power generation back in the hands of private entrepreneurs. Electric cars require power wherever they go, and unless private sellers can offer electric “pumps” for green vehicles, consumers of electric transportation will have a hard time finding locations to “gas up.” Markets need to be able respond to the new demand generated by green vehicles, and in our current system this is all but impossible. Utilities were never meant to handle the complexity of a national, green energy market, let alone the demands of national transportation.

Just as importantly, markets are better gauges of scarcity than central planners. When power supplies fall, prices rise in response. If prices stay high, then demand falls accordingly. This allows consumers to self-ration. If we let consumers understand the real cost of their power consumption, they’ll be much more likely to turn off their lights when they aren’t being used, and much more inclined to look into alternative forms of energy when traditional energy sources become too expensive – especially if their investment in green technology could make them a buck or two down the road. Conversely, when energy is cheap, there’s no reason people should pay more simply because the local utility monopoly says they should.

Obviously the government will have its role to pay in the green revolution, but we should limit that role to laying pipes and power lines, and ensuring that when laws are broken, the perpetrators are punished. The government needs to establish fair-play rules and create a grid, but beyond that they need to let markets work, and allow competition to flourish. A lasting green revolution needs to benefit not only the earth, but the people who live on it as well. Too often the economic costs of environmentalism are overlooked, and too often it is the poorest among us who bear the brunt of those costs. Real cost-saving competition can help change that.

In the end, energy markets can spur a green revolution with real, lasting economic benefits and without the corresponding tax burden or loss of jobs so many traditional environmentalist solutions would require. The same entrepreneurial spirit that led to the Texas oil boom will lead us to a greener future, and competitive free markets, not state-sanctioned monopolies, will be the driving force behind this change.

Recent Posts by E. D. Kain



39 Comments so far ↓

  • balconesfault

    Perhaps not surprisingly then, it is Texas, not California, which has the largest installed base of wind generation capacity in the country. This isn’t just because of all the flat, windy Texas plains either. It’s because Texans are able to sell their wind energy to competing buyers on the market rather than simply back to their local utility.

    Ummm – no. Utter ignorance.

    In fact, this most certainly is because of the massive amount of land in West Texas that is privately owned, with almost non-existent population density, combined with that region of Texas being in one of the windiest zones in the country. In fact, despite a much more difficult regulatory process California led Texas by a country mile in wind farm development until just a few years ago. But by and large the best places to develop wind were filled, and the boom moved to Texas.

    For example – here is a wind resource map for California.

    http://www.windpoweringamerica.gov/images/windmaps/ca_50m_800.jpg

    And here is one for Texas.

    http://www.seco.cpa.state.tx.us/re_wind_maps.htm

    Take a look at how much of the Texas map is Class 3 and above for wind resources – and how much of the California map.

    Jesus H. Christ, man. Up your game! Is this just another attempt to ensure that the scientific community continues to look at the Republican Party with derision and mockery?

  • E.D. Kain

    Even so – even if California does have fewer wind corridors – that still doesn’t respond to my larger point, which is that a more market friendly energy sector has a better chance of spurring innovation and entrepreneurship than one based in heavily restricted utility monopolies.

  • E.D. Kain

    I might add that this really has nothing to do with the “scientific community.” I’m all for science and technology. Indeed, when I look at companies like Google or Microsoft, I see how science-friendly markets can be. The same can and should apply to green markets.

  • sinz54

    ed-kain: a more market friendly energy sector has a better chance of spurring innovation and entrepreneurship than one based in heavily restricted utility monopolies
    I agree.

    Just compare unregulated markets for services like ISP providers, software, etc., with the giant regulated monopolies like the old AT&T and utilities. The former clearly have much more innovation.

    It makes more sense to incentivize small companies to put their own green power onto the grid, than to ride herd on the big utilities to do it. They have to worry about economies of scale, making green power uncompetitive with coal; small companies don’t.

  • E.D. Kain

    sinz54 – exactly. The nature of green energy is simply much, much different than old fossil fuels. There are more opportunities for small start-up companies to profit. A decentralized, innovative energy sector is the only thing I can see working in what will be a very decentralized, highly innovative green technology revolution. One size won’t fit all.

  • balconesfault

    Well, I really hate false premises – because they lead to conclusions that often reflect more the ideology of the writer than the reality of the situation.

    For example – another false premise: Texans can choose their own electric provider, and providers compete heavily for customers.

    So what utility in America is the largest “Green Power” purchaser?

    Austin Energy – a utility wholly owned by the City of Austin, and for residents of Austin the sole provider of electrical energy. Texas has competition only where there is no publicly owned utility – for cities like San Antonio (CPS) and Austin (Austin Energy) there is no residential choice between utilities.

    http://www.nrel.gov/news/press/2009/679.html

    Meanwhile, CPS is working hard to catch up.

    http://sanfrancisco.bizjournals.com/sanantonio/stories/2009/06/22/daily8.html

    What I meant by the “scientific community” is the seeming willingness of some on the right to skip the most basic forms of due diligence in research (eg – comparing the available land for wind development in Texas and California) before jumping to very strongly held and defended conclusions.

    This article seems like grabbing at straws to try to weave gold. Moving towards the conclusion: Obviously the government will have its role to pay in the green revolution, but we should limit that role to laying pipes and power lines, and ensuring that when laws are broken, the perpetrators are punished.

    This wholly ignores that most of the renewable energy development we’ve seen in America to date would have have taken place without renewable Energy Credits being issued at the Federal and State level, without state utility commissions issuing Renewable Portfolio Standards that provide promise of preferred rate structures for utilities which meet specific standards, and without locally owned utilities like Austin Power and CPS where politicians set renewable energy purchase goals for the utilities based on community values.

    By the way, almost all energy-related pipelines in the United States are laid by private companies – even those currently being laid for CO2 capture systems. Just saying.

  • E.D. Kain

    They’re laid by private companies, but paid for by the public. In any case, I’m aware that not all Texas is run this way, and I’m also aware that at this point there is really very little in terms of scientific data to point toward a free energy market. This is largely because there hasn’t been much of one in the past and because we’ve never had a “green revolution” before. Now that people can start to afford solar, wind, etc. the dynamics are shifting.

  • balconesfault

    Just to add … first a correction (2nd to last paragraph should have said “would NOT have taken place”).

    Then to say that I agree with Sinz here – incentivizing small companies to innovate and bring energy to the grid is a great model here. There is no need for massive command and control of all facilities by large government.

    In fact, one of the strongest signs that calling Obama a “socialist” is pure jingoism is the fact that it would have been very very easy for a stimulus bill to have used the combined power of the DOE (energy know how and control over 3 major grids in America – WAPA, BPA, and TVA) and the BLM (massive renewable resource rich land holdings) to drive a fully Federally-owned renewable energy program. It didn’t, instead putting money out there to stimulate private business development of renewables. So can we just all agree that Obama isn’t really a socialist, and move on?

    There is a key here though – “incentivizing”. A few years back when solar energy cost 5x what conventional power cost, there needed to be money fed into developing technologies and scale-up of production before greater efficiencies could be achieved. That meant government … And as I noted again and again, without government the wind energy boom just wouldn’t be happening in America yet.

    Government had to set the agenda, with a look to the public welfare of tomorrow, and not just to profits for today.

  • balconesfault

    me: By the way, almost all energy-related pipelines in the United States are laid by private companies

    ed: They’re laid by private companies, but paid for by the public.

    me: huh? seriously dude? I appreciate you having the courage to get down here in the comments and engage us, despite my caustic tone, but really? I have no idea what you meant by that response.

  • ryanbuck

    What do you consider a “Green Revolution”? Is there a benchmark on the amount of load capacity that should be taken up by wind/solar/geothermal/etc.?

    One big hang up I have with your argument is that competition will naturally lead to a Green Revolution, but I only see it being put off. Looking at costs per kilowatt-hour or kilowatt-hour per land area used, wind and solar lose to natural gas and coal by a wide margin. The capital costs are double for wind what they are for nuclear per kW installed. Even though wind has no fuel costs, it currently is more expensive to maintain and operate compared to the big plants.

    https://oa.doria.fi/bitstream/handle/10024/39685/isbn9789522145888.pdf

    I know that the idea is to get other small players on the market and that no start up has the chance to build a big nuclear plant, but with issues like cost/kW installed, intermitency, and need for large tracts of land, how can small companies that renewables be expected to take a bite out of the much portion that is taken up by coal?

    Free market theory would seem to dictate that natural gas and coal would continue to be primary source of electricity for next few decades, assuming no unexpected spikes in fuel prices.

    Also, I’m not entirely assuaged about another Enron situation and energy traders cornering a market.

  • Observer

    Bravo. The biggest obstacle to energy innovation has long been regulation designed to protect existing utilities, private or public. There should be no reason why every house, building or farm capable of housing an alternative energy source can’t become a utility on its own, competing to sell the cheapest surplus power to the grid.

  • E.D. Kain

    So…you’re saying that the power infrastructure in the United States is paid for entirely by private companies? I’m pretty sure a large portion of that tab is paid for with tax dollars. If I’m wrong, I’m wrong, but that was the impression I had. Links, links, links….

  • E.D. Kain

    Bravo. The biggest obstacle to energy innovation has long been regulation designed to protect existing utilities, private or public. There should be no reason why every house, building or farm capable of housing an alternative energy source can’t become a utility on its own, competing to sell the cheapest surplus power to the grid.

    Exactly.

    P.S. My previous comment was directed to balconesfault.

  • balconesfault

    So…you’re saying that the power infrastructure in the United States is paid for entirely by private companies? I’m pretty sure a large portion of that tab is paid for with tax dollars.

    Nope. I’m drawing a distinction between pipelines and power lines. Again, you wrote: Obviously the government will have its role to pay in the green revolution, but we should limit that role to laying pipes and power lines. It is a minor point given this overall discussion, but once again, our energy pipeline network in America is almost wholly constructed with private funds, and run by private companies.

    Utility lines are different – there is real hodgepodge. There are three massive federally owned grids – the WAPA, the BPA, and the TVA, all created originally in part to carry power from large federal hydroelectric projects. Most of our old utility corridors were built with public moneys, since most of the utilities were publicly owned in the past. However, these days many transmission corridors are built with private money, with the promise of preferred tolling charges to recoup the investment, while others are still being built with public money when there are specific long-range planning goals to be met via the transmission capacity, rather than short term market service.

    As for everyone being able to build their own utility – that’s pretty much happening. There are caveats – you can’t just go dam up the stretch of river that runs through your property to build your own hydro plant because the Corps of Engineers is tasked with managing streamflow in our country. You’re going to run into serious zoning problems (where zoning exists) or potential nuisance suits if you go building a commercial size wind turbine on your property less than 1500 feet from your neighbor’s residence – those things can be noisy. But on the point that barring adverse impacts to your neighbors or to the environment, people should be able to generate power, I really don’t see anyone arguing against that.

  • SFTor1

    ed-kain says: “Indeed, when I look at companies like Google or Microsoft, I see how science-friendly markets can be. The same can and should apply to green markets.”

    The critical technologies in the microcomputer and networking markets were developed on the public dime, mostly through defense and aerospace appropriations. What Silicon Valley did was to commercialize existing technologies and create markets for them.

    A little bit of history goes a long way.

  • E.D. Kain

    balcon – I suppose the entire process has been hodgepodge. Water pipes are still largely public. Oil pipes may be privately laid, but there is still a great deal of government involvement – and perhaps rightfully so. And it depends. It varies from one region to the next. In any case, I think we disagree less than we may think. I’m not arguing against all government involvement in the energy sector – just a scaling back of the state’s involvement in creating utility monopolies.

    sftor1 – Sure, plenty of R&D happened on the government’s dime, and plenty was initiated privately. Either way, the government isn’t involved in sustaining technology monopolies the way they sustain those monopolies in energy or health care. How government is involved in industry is much more important than whether they are or not. Implementation is everything.

  • balconesfault

    Water pipes are still largely public.

    Ummm … yes. That’s because water systems in America (outside of NOLA) are universally publicly owned. Although there certainly are a lot of corporations licking their lips over privatizing our water supplies.

    Oil pipes may be privately laid, but there is still a great deal of government involvement

    I do not understand this still. Yes, we do grant eminent domain rights to companies to lay common carrier pipelines, but aside from that, what government involvement? FERC regulates tolling as part of their interstate commerce function, and DOT oversees pipeline safety, but that’s about it.

    And it depends. It varies from one region to the next.

    I repeat … huh?

    just a scaling back of the state’s involvement in creating utility monopolies

    So, again, which monopolies are you against? As I noted, a publicly owned utility is the largest consumer of Green Energy in the country. And that’s a public utility that serves only one city. The same public utility also funds energy conservation programs throughout the city, provides rebates to purchasers of solar panels for their homes, and provides an annual payment back to the city that helps reduce the property tax rate. And that’s bad for the public how?

    And I’m not even going to try to deal with the comparison of the computer industry with energy and medicine. You could spend two or three more posts pointing out how that analogy doesn’t work.

  • MFarmer

    “A little bit of history goes a long way.”

    Reading Gilder will give you an even better understanding. The pertinent fact is that the state’s role was not critical, and it actually slowed development — development that would not have taken place without the private sector.

  • Observer

    Balcones, I *have* seen people argue against that. Some of them happen to be legal counsel for existing utilities.

    I’m just sayin’. :-)

  • balconesfault

    lol – well Observer, I have to admit that were I being paid to represent a company with billions in high dollar assets that could be stranded by competition from small generators – yeah, I might be making that argument.

    That is a problem as we push for more nuclear capacity in the US. In the decade that it’ll take to design and build and debug and bring online a new nuke, all kinds of things could happen – for example, the City of Austin utility is estimating that there is about 3 GW of potential capacity were all of the roof space in town to be covered by solar panels. And that’s one of the reasons that the city is not investing in the additional nuclear capacity to be built at the South Texas Plant we’re already bought into … nobody wants to drop the money it’s going to take to build a nuke, and find out a decade from now that the market has changed in ways that make it impossible to recover the initial investment capital.

    Certainly if I were representing a utility being pressed by government to invest in nuclear, I’d want some assurances that this wouldn’t take place.

  • SFTor1

    MFarmer: I have a hard time seeing how government involvement for instance slowed the development of the Internet.

    I have a hard time seeing how any corporation would have created a universal means of communications that belongs to no one and everyone.

    ed-kain: the point is that there is such a thing as basic research. A tremendous amount of it is going on in government institutions. It’s results are regularly given away to private companies (especially pharma), who commercialize it and benefit from it.

    I suppose the point is that a government/private sector symbiosis works quite well. I have a basic problem with the assertion that government should play no role or a minor role in development of science and economic sectors. It is a driving force in it.

  • SFTor1

    As far as the energy sector is concerned, is there anyone who remembers all the joy and goodness that was brought to California by the deregulation of energy markets in 2001?

    Private corporations such as Enron immediately took the opportunity to game the system and gouge ordinary Californians. Not a proud moment for the privatization of the sector. As a matter of fact it is an excellent case study of why one shouldn’t.

    We are currently waging the same battle agains financial institutions, and the bottom line remains the same: private enterprise demonstrates again and again that they cannot be trusted to observe constraint or promote the public good. Perhaps it is fair to say that this is the very origin of regulation?

  • SFTor1

    I need to restate a point a little more strongly:

    Ed-kain says: “And, of course, what about Enron? Won’t those greedy corporations take advantage of people if left to their own devices?”

    It’s not a question of whether they would. The fact is that they DID.

  • sinz54

    MFarmer: Reading Gilder will give you an even better understanding. The pertinent fact is that the state’s role was not critical
    Since we’re all agreed that “a little history goes a long way,” let’s look at how public-private partnerships were so important to American technological development:

    1. The principle of mass production by interchangeable parts started with the Army’s need for mass production of rifles in the 19th century. Henry Ford didn’t invent it, the Army’s contractors did 50 years earlier.

    2. RCA–the Radio Corporation of America–was originally created by the United States Navy 100 years ago, to be a supplier of radios to the Navy. (Because radio, as you know, was invented by Marconi–and the U.S. Navy was reluctant to depend on a foreign supplier like Marconi’s own start-up company.) With that seed money and a guaranteed customer, RCA grew and grew. As radio become ubiquitous with the public, RCA grew into a corporate giant.

    3. Early in the 20th century, the fledgling airline industry was failing because the planes were too small, too uncomfortable, and too unreliable for anyone but barnstormers and the wealthy looking for a joy ride. The U.S. Government subsidized the airline industry by requiring it to carry air mail for the Post Office. That subsidy continued until advancing technology finally produced LORAN beacon navigation and the first really comfortable airliner–the DC-3. Only then were airlines able to get enough paying passengers to turn profits without Federal subsidies.

    4. The now familiar software technologies of a Graphical User Interface (GUI) with windows and mouse, networked workstations via Ethernet, and the software development technique called object oriented programming, were first developed at Xerox Palo Alto Research Center (Xerox PARC) in the 1970s. But back then, personal computers were in their infancy, without the power to run such advanced software. Xerox would likely have shut down the project as commercially unprofitable–except that PARC found one very interested customer: The Central Intelligence Agency. The CIA saw this software as the answer to how their intelligence analysts could manage all the intel data and connect the dots to form a complete intelligence picture. They heavily subsidized PARC’s work, putting the software on hundreds of high-end workstations. This continued until the technology of personal computers advanced to the point that the software could run on PCs. I remember when the roll-out occurred in 1986, at a technical symposium on object-oriented programming. The CIA, due to their support, was represented on the Program Committee.

    So if we really want “green” power technologies, history shows that public-private partnerships like these, with the Government providing seed money or being a guaranteed customer for a while, are the right way to go. The notion that the U.S. economy was laissez-faire till FDR came along is a false myth.

  • sinz54

    sftor1: Private corporations such as Enron immediately took the opportunity to game the system and gouge ordinary Californians. Not a proud moment for the privatization of the sector. As a matter of fact it is an excellent case study of why one shouldn’t.
    A tiny start-up company selling solar power or operating windmills just doesn’t have the market share to “game the system.”

    Besides, it wasn’t Enron’s physical power assets–oil pipelines, paper mills, etc.–that were the source of the fraud. It was Enron’s other business–commodity trading–that was where Enron engaged in fraudulent accounting practices.

    What you are pointing out is that the game of FINANCE–whether with derivatives based on subprime mortgages or whether with Enron’s commodity futures trading–needs regulation to prevent fraud.

    There also needs to be regulation to ensure that a company promising to sell, say, power from solar panels really intends to build and operate those solar panels. But the chance that any of these fledgling companies can corner the market on power is nil for many years to come.

  • sinz54

    sftor1: I have a basic problem with the assertion that government should play no role or a minor role in development of science and economic sectors. It is a driving force in it.
    Yep.

    It’s been a driving force for centuries. Long before the United States existed, European governments were doing it. For example, the German government with their chemical industry, which became a world leader.

  • ryanbuck

    I know its a repost, but the original got lost in the fray.

    What do you consider a “Green Revolution”? Is there a benchmark on the amount of load capacity that should be taken up by wind/solar/geothermal/etc.?

    One big hang up I have with your argument is that competition will naturally lead to a Green Revolution, but I only see it being put off. Looking at costs per kilowatt-hour or kilowatt-hour per land area used, wind and solar lose to natural gas and coal by a wide margin. The capital costs are double for wind what they are for nuclear per kW installed. Even though wind has no fuel costs, it currently is more expensive to maintain and operate compared to the big plants.

    https://oa.doria.fi/bitstream/handle/10024/39685/isbn9789522145888.pdf

    I know that the idea is to get other small players on the market and that no start up has the chance to build a big nuclear plant, but with issues like cost/kW installed, intermittantancy, and need for large tracts of land, how can small companies that renewables be expected to take a bite out of the much larger portion that is taken up by coal? These small companies would be able to serve a local population, but more and more people are flocking to cities which are away from these dense wind areas or ultra sunny spots.

    All things considered, why would a deregulated market lead to a “green revolution”? Are you assuming that the dereg would be accompanied by government incentives that make renewables more competitive with fossil fuels? Are you assuming that there will be loan guarantees for large scale nuclear projects and ease of restrictions so that smaller reactors can be design and built without fronting a massive bill to get it past the NRC? What are the roles of national labs?

    Free market theory would seem to dictate that natural gas and coal would continue to be primary source of electricity for next few decades, assuming no unexpected spikes in fuel prices.

    Also, I’m not entirely assuaged about another Enron situation and energy traders cornering a market, either.

  • balconesfault

    Ryanbuck: Even though wind has no fuel costs, it currently is more expensive to maintain and operate compared to the big plants.

    https://oa.doria.fi/bitstream/handle/10024/39685/isbn9789522145888.pdf

    Ummm … ok. This somehow brings to mind the old bad joke “Aside from that, how was the play, Mrs. Lincoln?”

    If you read the critical table in the link you keep writing:

    FUEL COST OF ELECTRICITY PRODUCTION [€/MWh]
    Nuclear 5
    Gas 40
    Coal 26
    Wind 0

    OPERATION AND MAINTENANCE COSTS, WHEN 8000 h/a [€/MWh]
    Nuclear 10
    Gas 5
    Coal 8
    Wind 11

    So yeah … wind may be the most expensive to maintain … but when you add the cost of fuel to the cost of maintenance, you get [€/MWh]:

    Nuclear 15
    Gas 45
    Coal 34
    Wind 11

    Thanks for playing.

  • balconesfault

    sinz: “The notion that the U.S. economy was laissez-faire till FDR came along is a false myth.”

    “What you are pointing out is that the game of FINANCE–whether with derivatives based on subprime mortgages or whether with Enron’s commodity futures trading–needs regulation to prevent fraud. ”

    (government investment in technology has) “been a driving force for centuries. Long before the United States existed, European governments were doing it. For example, the German government with their chemical industry, which became a world leader.”

    Bravo. I even learned some stuff in there, which is more than I can say from most of the headline posts at this site.

  • ryanbuck

    balconesfault,

    You forgot about adding the capital costs associated with construction and installation. In the report they are:

    Nuclear 20
    Gas 6.2
    Coal 11.5
    Wind 41.9

    When added to the math you did, you get:

    Nuclear 35
    Gas 51.2
    Coal 45.5
    Wind 52.9

    Don’t cherry pick data. If you are assuming that a start-up will have to build new turbines, then these real costs will have to be accounted for. For small start-ups, capital costs might be mitigated since they are not aiming for the installed base of a nuclear or coal plant, but then how can wind be expected to take on a large portion of the electrical generation capacity?

    Also for these small players dealing in intermittent power sources, won’t they have costs associated with needing to purchase electricity from bigger utilities so that their customers won’t experience outages? It would seem that smaller players would lost customers, assuming that they’re customers are incredibly idealistic and sacrifice base load for being on wind.

    I’m not arguing for the coal, I’m just skeptical about the idea that the free market will lead to a supposed “Green Revolution”

  • balconesfault

    You forgot about adding the capital costs associated with construction and installation. In the report they are:

    I didn’t forget that at all. This is why there is a need for governmental involvement if we want to stimulate the renewable energy sector. If we followed the author’s prescription for governmental involvement – limit that role to laying pipes and power lines, and ensuring that when laws are broken, the perpetrators are punished. – we wouldn’t have any sizable wind/solar industry in
    America right now.

    If your point is to emphasize your scepticism about the idea that the free market will lead to a supposed “Green Revolution” I’m with you, however. And that is a major problem with the free market – and a major reason why people form governments, to do things that build for the long-term prosperity of the people which the free market just won’t do on its own.

  • ryanbuck

    balconesfault,

    I never thought we we’re in disagreement. My questions are targeted toward the author and other free market deifiers that would reach the conclusions that the free market is the best path to greener technology. Public investment is essential for renewables if one wants them to make up more than the minute sliver in the capacity pie chart.

    Also, It’s best not to slight people who argue the point that you agree with.

  • balconesfault

    My apologies – I thought you were trying to make the point that since non-fuel O&M costs for wind/solar were less than for conventional plants, it meant that we should not be investing in them. Tough to tell the reality based from the Randians sometimes.

  • SFTor1

    Sinz: thank you for providing a more vivid picture of the private/public interface.

  • E.D. Kain

    So – after all these very thoughtful comments, plus some emails, I realize that this piece was no nearly well-researched enough, and that it is marred by some of the not-so-well-researched statements. My apologies for this. I still hold to the idea that freer energy markets would be a good thing, and that where monopoly exists and where regulations are too strict and prices are too controlled, we need to deregulate. To the question of Enron, you have to understand that there was actual criminal behavior going on. It was an abuse that should not warn us away from the act of deregulation, but that should help point us toward doing it better in the future.

    Thanks for all the feedback!

  • E.D. Kain

    “not” nearly well-researched enough… (typos!!!)

  • balconesfault

    E.D., if you’re ever in Austin, let me buy you a beer.

  • E.D. Kain

    That’s one city I’ve always wanted to visit. A free beer is always a good incentive…

    Cheers!

  • SFTor1

    ed,

    You are handling yourself like a stand-up guy. Kudos to you.