Sustainable Energy in the Free Market

Energy is a hot topic these days. There is a free market solution, however, government restriction and regulation does not allow market forces to develop that solution. What is a free market? How does the current energy system work? How would the free market solve the energy problem?

Defining the Free Market
The free market may seem allusive, as many times it is not clearly defined. What one person has in mind of what a free market is, differs from that of another individual.

The free market is based on three concepts, an individual can voluntary exchange with any other individual, any individual/business can enter the market place, and any individual/business can leave the market place. In essence, a free market is free exchange, free entry, and free exit.

If anything, governments role is minimal or non-existent. A free market is a market that is free of government intervention and regulation, besides the minimal function of maintaining the legal system and protecting property rights, and is also free of private force and fraud. By corollary, any regulation by government of exchange, entry, or exit is no longer a free market, but a controlled market.

The Current Energy System
The current energy market is not a free market in energy, it is a controlled market, filled with restrictions and regulations. For nearly 100 years, the government has coaxed the energy market into the current chaos we now have.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h2419enr.txt.pdf
http://thomas.loc.gov/cgi-bin/bdquery/z?d110:H.R.6:
http://thomas.loc.gov/cgi-bin/query/z?c102:H.R.776.ENR:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ058.109
http://www.fws.gov/laws/lawsdigest/fedpowr.html

Corporations are granted monopolies on power production and transmission. If it were an organic monopoly, that wouldn't it be a problem, because the free market would allow competitors in. However, in a mandated monopoly, few players if any are allowed to play in the current energy market. The mandated monopoly restricts competition. There is no free entry into the marketplace.

Furthermore, by law, individuals are not allowed to share power with other individuals.
http://www.off-grid.net/2006/01/18/laws-prevent-effective-off-grid-power/

Not only are corporations granted monopolies on power production and transmission, but individuals are not allowed to freely exchange electricity the individual generates.

The Free Market of Energy
The Free Market solution of Energy would be to repeal all the regulations and restrictions preventing free exchange, free entry, and free exit into the marketplace for energy. This includes the Department of Energy. Individuals would be able to freely exchange energy with one another. It is a fairly simple solution, that would lead entrepreneurs the ability to innovate and invent newer, better, more energy efficient methods of production and transmission.

Production to Transmission, Transmission to Transmission, to Consumption
As it stands today in the highly regulated controlled energy market, the Grid is not an efficient method to distribute energy. There is substantial energy losses during transmission, some estimate as low as 7% to as high as 30%+ loss in energy.

http://en.wikipedia.org/wiki/Electric_power_transmission
http://www.clf.org/general/index.asp?id=374
http://www.bsharp.org/physics/stuff/xmission.html

The reason behind the transmission loss is the distance electricity has to travel from production to transformers, transmission to transformers, to transmission, to transformation to consumption. AC Energy is created thousands of miles away, transmitted over thousands of miles of transmission lines, all the way to our living rooms, transferred back to DC to be consumed.

With all these inefficiencies, why are we still forced to use the grid?

Production to Consumption
Now rather than transmitting energy thousands of miles away, what if it were only 100 miles, 10 miles, 1 mile or even right in your own home? No longer are we wasting 7%-30% energy. Truly deregulating the energy industry and allow the free market to work would allow this to happen. Rather than centralized power plants that we can't even see, power would be generated locally or individually. Individuals will have the choice to choose affordable sustainable energy solutions.