Will Spain Learn Its Lesson on Free Markets?
Gabriel Calzada and Manuel Fernández Ordóñez rightly note that grid stability depends in part on conventional power plants providing inertia (“How the Lights Went Out in Spain,” op-ed, May 1). The greater the share of renewables, the less inertia. But how did Spain get to this point? Through government design of the grid and the absence of a free market for electricity.
The early decades of the electricity sector were competitive, innovative and dynamic. Improving reliability was the key to success as in any competitive business. Eventually the government took increasing control of the grid. Then 25 years ago Spain’s grid moved to the “liberalized” but centrally planned market structure common throughout the world. The appearance of a market structure created the illusion of a free market, but it’s nothing of the kind.
Markets matter. When allowed to work freely, they provide the lowest prices, the greatest abundance, the widest array of products and services and the highest level of reliability. Spain needs to get back to the basics in electricity by adding markets back into the electricity markets.
