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I've said repeatedly that offshore wind should be done by State owned companies
Why?
Not that I particularly object to the sovereign taking an active hand in industrial development, but I was under the impression that wind actually was a sector where simply ensuring the correct market structure via preferential dispatch and fixed prices would be sufficient to permit private planning units to perform the actual industrial development. This not so?
- Jake Friends come and go. Enemies accumulate.
investing at a cost of funding which is that of the State rather than that of the private sector;
As QE demonstrates, the cost of State development credit is zero. Once productive assets are complete, then development credit may be retired and recycled by refinancing.
Securitisation would be a conventional way of refinancing: I advocate direct investment in energy production by 'unitisation' - ie monetisation of energy. "The future is already here -- it's just not very evenly distributed" William Gibson
As QE demonstrates, the cost of State development credit is zero.
short term funding is at zero, for now, but not long term funding. it's relatively cheap right now, but that may not last (cf "bond vigilantes).
But in any case, unitisation will cost more than the sovereign cost of funding, otherwise why would investors do it? Wind power
I am not talking about State Debt, which is public borrowing: I am talking about State Credit.
That is what QE actually is: it is not debt, although that is the fundamental misconception of Keynesian and Monetary economists alike. It is akin to a non interest-bearing redeemable share.
State Treasuries may simply spend (under professional management like your good self of course) the necessary development credit either by writing cheques drawn on a central bank or by issuing Treasury notes (eg the US 'greenbacks').
Private banks already do precisely the same thing when they pay staff; other costs; dividends to investors; or when they buy (say) government debt. In other words they both lend and spend credit into existence, creating demand deposits as they do so.
That is how our deficit-based system works.
Jerome a Paris:
But in any case, unitisation will cost more than the sovereign cost of funding, otherwise why would investors do it?
Unitisation of energy is the issue of Units redeemable in payment for energy. (NB to avoid misunderstandings, Units do not secure supply).
There are many billions of dollars already invested in energy, typically through oil and gas Exchange Traded Funds which are generally served (and too often pillaged) by investment banks using structured finance and/or the futures markets.
These ETFs - like any other funds invested in commodities - are 'hedging inflation', and you will understand that like gold, energy offers no return on investment.
Unitisation creates an investment denominated in energy rather than in fiat currency. So it does not necessarily cost more: in fact, the beauty of funding renewable energy in this way is that the Units which are used to fund renewable energy projects or even energy saving projects cost nothing to redeem. "The future is already here -- it's just not very evenly distributed" William Gibson
The first of the issues you raise can be taken care of by a public industrial development bank, no? That is a good idea in any case, and would have wider impact than "just" wind power. The second issue is one of liaisons with the grid operator, and there is a good case to be made that the grid operator needs to be heavily regulated and/or under direct sovereign control. Of course, there is a case for subordinating the generation of power to the grid operator rather than separating those functions, which I suppose would put the wind farm development indirectly under sovereign management...
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