In fact historically publicly owned utilities have provided better service at lower prices than private and semi-private utilities - not in every case (I can think of exceptions) but on average. Note that this applies specifically to public goods, not to all goods. There is no reason to think that publicly owned supermarkets would do well, and a lot reasons they think to do badly.  But power generation, and utility lines are by standard economics 101 public goods. We ought to at least seriously consider  whether we would be better off providing them publicly.

or at least, some of them.  I agree that fannie mae and freddie mac should either be nationalized or allowed to go broke -- and the same should have been applied to Bear Stearns, and should be applied to any other financial institution going forward that is "too big to fail".  I'm glad and a little amazed that The Economist is making this argument.

I think there is probably a role for public banks, particularly for small businesses, to fund R&D, and for infrastructure development, because those tend to be ignored by the big financial players.

Keep the grid public, open, and neutral -- net neutrality, just like the internet and for the same reasons.

But generation? That should be a competitive market, just like end use is.

grist.org

The real problem is we live in an economic slave state where it takes 30 years -- a life time -- to buy a home.

An indentured servant in the 1700s would have worked his way into ownership in 7 years, and he would have ten acres.

You can't expect people to give a hoot about cleaning up a planet when they struggle for survival each and every day.

Keep the grid public, open, and neutral -- net neutrality, just like the internet and for the same reasons.

But generation? That should be a competitive market, just like end use is.

If you want a renewable dominated grid, rather than a grid in which renewables play a niche role this is not as obvious as you think. Or at least your "neutral grid" is going to have to come with a very complicate price structure.

Here is what you need to make a grid 80% or more dominated by sun and wind work:
You will need storage to let shift supply to match demand. (Even if low temp storage and BEV batteries allow demand shifting, you are going to have a lot of demand that has be met as it occurs.)

You are going to want the ratio between solar and wind generation to match demand as closely as possible to minimize the need for storage.

You are going to want to control how much of each type of generation occurs where to minimize that same need for storage.

Yeah, you can have a complicated series of incentives, regulations and tiered pricing structures to accomplish this. But what you end up with is another too big to fail system, privately run, publicly guaranteed.  If you want renewables to come fast, and to actually displace fossil fuel, I think you will need heavy public involvement in generation. Because of the weird 21st century market fetishism, it probably will have to be a public-private partnership with all the problems it involves rather than straight public ownership. But maybe for just one moment we can drop the pretense that is either the best or cheapest way to get reliable low-carbon energy.

Yes, but within reason.  The availability of power is a pretty clear public good and the nationalization argument is strongest when it comes to the wires of the grid.  Generation on the other hand is much more amenable to competitive forces - but for those to work, there must be a willingness to let those firms fail.

So while I agree with you that a good case can be made for nationalization of certain parts of the power system, I would not apply that logic to everything.  Let's do be sure though that the bits we don't apply it to are truly private without any implicit or explicit government crutches to lean on when the going gets hard.

But before I read all the way down the list.

You're one smart dude.

Re: your comment to David, I don't think it's as complicated as you make it out to be.  You're really not talking about generation per se, but simply system management.

The services you describe are provided today by the Independent System Operators that are essentially public entities.  Not just load balancing as you mention, but also voltage support, power factor correction, opening and closing breakers to route around congested areas, maintaining spinning reserve and any number of other ancillary grid services.  (And worth noting that in some cases, they provide those services with complicated market-based processes and in other cases they simply treat it as a system management cost.)

Renewables don't make that management function any more complicated - just different.  But in any event, that system management function is readily bundled in with grid operation and need not be tied to the generator.

I will note that all these costs are affected by placement of renewables, and as they rise they can cause backlash. For example in Denmark their has been increasing grid stability problems. This is caused by a combination of getting a lot of power from wind with getting a lot of power from combined heat and power, neither of which the grid operator controls the timing of. One of the problems is that they provided incentives to the cogen operators to supply power during peak periods. Since much of Danish cogen in the areas with highest wind is waste heat from natural gas used to run greenhouses, operators were able to comply by storing heat. But there have been occasions when highs wind also occured during peak,  and the grid operators had to scramble to find a way to place the excess power. What they really need is the rework the incentives for flexibility rather than just production at a scheduled time. Since the co-gen producers have some flexibility ideally, there should be a system where they produce power as needed rather than on  a fixed schedule (subject to guaranteeing the system buying a fixed amount in a 24 hour period but scheduling that production according to need.) Don't know how hard it would be, but given that the generators already run just a few hours a day, with low temp waste heat stored for gradual release into greenhouses, it ought to possible.

Note that we already see problems with wind supplying around 24% of total consumption in one of the major Danish grids. I don't think any grid in the world currently runs with a majority of its power coming from variable sources. If you just allow any renewable variable source to attach without any balancing you get real problems. Sure enough operating and spinning reserves can compensate. But many of these will be coal or natural gas, which ends up losing a lot of the carbon reduction benefits. Also if your generation is not balanced right, if you have the "free market" providing a mix that is too far from optimal you will need a lot more spinning and operating reserves than you would otherwise.

OK, but that's just a pricing issue, not a market issue.  If power isn't worth as much this hour than next hour, price it differently.  We already do that all the time in the US.  For example, if you look at hourly pricing at any given moment on any given node on PJM, you'll find some hours when the price is actually negative, reflecting the fact that no one wants power during that time.  (The reason it goes negative is because some base-load plants - like coal, nuke and much cogen - have "must run" hours, when it is more cost effective to run and take a loss than go through a lengthy shut down cycle.  Thus, supply exceeds demand and price goes negative.)

But I digress.  The point is simply that plenty of market mechanisms exist to factor in differential pricing at differential hours.

Another point: the vast majority of the cogen installed in the world runs baseloaded or thermal-load following.  There are exceptions of course, but they are, well, exceptions.  My understanding of the Danish issues you mention is that they were a function of wind rather than cogen, since a high concentration of wind on the grid goes on and off as wind patterns shift without regard to load.  Moreover, a cogen load - driven by local heat demand - is almost always coupled to a local power load, while a wind load has no such natural linkage.  As a result, one finds that wind has much more potential to get out-of-synch with local needs than cogen.

A minor quibble, but worth keeping in mind that the system management issues you raise arise only when intermittent renewables (hydro, wind, solar) become significant fractions of the grid, and don't really arise with other local-gen technologies.

Was a combination of wind and cogen. If either had not been there no problem. The combinatation gave a huge percentage of power the grid could not schedule. The use of waste power from gas heated greenhouses makes Danish co-gen different from normal co-gen. Of course gas heated greenhouses in Denmark are not a great idea anyway. I think Lovins once calculated that they ship tomatoes from Sicily by air for less energy than the local gas-heated greenhouses used to produce the same tomatoes.