This FSR topic of the month explores governments’ intervention in four aspects of the power industry: (i) generation adequacy, (ii) generation mix, (iii) organization of the transmission grid, and (iv) asset ownership. This week’s post discusses the role of governments in shaping the generation mix.
In planned economies, governments choose the power production technologies. Civil servants examine the different technologies available at a given time, compare their costs, and determine the optimal mix. In the vertically integrated and regulated monopolies of old, utility planners were performing this task, in cooperation with civil servants.