What's to say that encouragement works? Does the 12B subsidy stipulate that more plants must be built? If not, keeping supply limited and price per Watt high may be more profitable.
I'm assuming nothing -- the party that burns 12B of taxpayer money on subsidies should show that it works. It is plausible that there are no new potential market participants as building power plants is expensive and the entrenched players don't want to compete with themselves.
1. It does not seem to be “taxpayer money” nor “subsidies”? It’s customers paying money for electricity.
2. If no new or existing market participants are willing to expand capacity, that would indicate that existing prices aren’t worth it for them to do so. Companies are willing to spend far more than the cost of building a new power plant for things like AI - and they’re often even building power generation on top of the AI build outs. So it has to be more than “It’s expensive”.
What you're touching on is an ancient debate :) Should this part of society be top-down planned or should it be market organized?
I know how I feel about this - I much prefer price signals here; it allows any developer that can meet the spec to build energy production - distributed decision making over centralized decree - and it allows the other side of the equation, consumers, to decide they'd rather not pay for this generation: Curtail demand rather than increase supply.
Like - maybe I don't want to pay energy prices this high, I can choose to insulate my house better or get a heat pump and thus reduce my electrical bill. The price signal lets everyone in the market choose how to act, rather than a central authority declaring we must build, say, more gas turbines and share the cost of that across rate payers.
But, there are people much, much smarter than I that completely disagree with this position. In the end I think the answer is how you feel about human nature, the capability and shortfalls of markets and the complexity of deciding how societies' resources should be allocated.
Comments
What's to say that encouragement works? Does the 12B subsidy stipulate that more plants must be built? If not, keeping supply limited and price per Watt high may be more profitable.
Wouldn’t that assume there are no potential market participants who want more market share in a profitable market?
I'm assuming nothing -- the party that burns 12B of taxpayer money on subsidies should show that it works. It is plausible that there are no new potential market participants as building power plants is expensive and the entrenched players don't want to compete with themselves.
1. It does not seem to be “taxpayer money” nor “subsidies”? It’s customers paying money for electricity.
2. If no new or existing market participants are willing to expand capacity, that would indicate that existing prices aren’t worth it for them to do so. Companies are willing to spend far more than the cost of building a new power plant for things like AI - and they’re often even building power generation on top of the AI build outs. So it has to be more than “It’s expensive”.
What you're touching on is an ancient debate :) Should this part of society be top-down planned or should it be market organized?
I know how I feel about this - I much prefer price signals here; it allows any developer that can meet the spec to build energy production - distributed decision making over centralized decree - and it allows the other side of the equation, consumers, to decide they'd rather not pay for this generation: Curtail demand rather than increase supply.
Like - maybe I don't want to pay energy prices this high, I can choose to insulate my house better or get a heat pump and thus reduce my electrical bill. The price signal lets everyone in the market choose how to act, rather than a central authority declaring we must build, say, more gas turbines and share the cost of that across rate payers.
But, there are people much, much smarter than I that completely disagree with this position. In the end I think the answer is how you feel about human nature, the capability and shortfalls of markets and the complexity of deciding how societies' resources should be allocated.
To have a market, some organization needs to administer it. PJM operates transmission and facilitates a regional wholesale electric market.
https://en.wikipedia.org/wiki/PJM_Interconnection
https://en.wikipedia.org/wiki/Regional_transmission_organiza...