The generator mafia in Lebanon

…blackouts are costing the Lebanese economy about $3.9 billion per year, or roughly 8.2 percent of the country’s GDP.

I asked why the Lebanese government can’t put the private generators out of business.  He replied that EdL [the state-owned electricity company] is losing some $1.3 billion per year, while the private generators are taking in as much as $2 billion per annum.  “It’s a huge business,” he said, “and it’s very dangerous to interfere with this business.”

…Nakhle, an official in the Energy Ministry, was admitting that the generator mafia bribes Lebanese politicians to make sure that EdL stays weak and blackouts persist…

Maya Ammar, a model and architect in Beirut…told me, “The one reason is in Lebanon that we do not have electricity is corruption, plain and simple.”…The electric grid, she continued, is “a microcosmic example of how this country runs.”

That is from the forthcoming and excellent book by Robert Bryce, A Question of Power: Electricity and the Wealth of Nations.


So, Lebanon simply needs to follow what was probably the most successful electrification program in human history?

'GOELRO plan (Russian: план ГОЭЛРО) was the first-ever Soviet plan for national economic recovery and development. It became the prototype for subsequent Five-Year Plans drafted by Gosplan. GOELRO is the transliteration of the Russian abbreviation for "State Commission for Electrification of Russia" (Государственная комиссия по электрификации России).'

And here were the results - 'The Plan included construction of a network of 30 regional power plants, including ten large hydroelectric power plants, and numerous electric-powered large industrial enterprises. It was intended to increase the total national power output per year to 8.8 billion kWh, as compared to 1.9 billion kWh in Imperial Russia in 1913. Soviet propaganda claimed that the plan was basically fulfilled by 1931. In reality, only three out of ten hydroelectric stations were built by 1930: the Volkhov, the Svir, and the Dnieper Hydroelectric Stations. The goal of 8.8 billion kWh nevertheless was reached in 1931, and national power output continued to increase exponentially, reaching 13.5 billion kWh by the end of the first five-year plan in 1932, 36 billion kWh by 1937, and 48 billion kWh by 1940.'

Admittedly, the TVA and Bonneville Power Administration were pretty successful too.

Don't forget to install a gulag to liquidate all generator owners, that way you'll be sure to kill off all of the generator mafia and even a few petit bourgeois.

Didn't expect you to be a Soviet groupie. All these power plants were planned by foreign engineers, had General Electric and other imported equipment, and were paid for with proceeds from the sale of wheat confiscated from starving peasants. Excellent plan.

Generating electricity is the easy part. The great challenge is delivering it at every client. Ask that company in California liable for the large wildfire.

Middle Easterners are more jaded than the average global citizen. Plenty of Lebanese people are perfectly capable of solving the power outage problem or badgering their politicians about it, but they don’t believe anything will change. Civil society and NGOs are practically non-existent. The mentality is that you’re naive if you think you can advance your non-religious cause. Part of this is a legacy of colonialism as well as neocolonial power plays.

Lebanon and Syria are so small. The people of those countries cannot control their destiny without a systematic rejection of outside influence. Russia wants to lease our port for $50M a year? Sorry Russia, you can ruin our country so no thanks. Saudi Arabia can bail us out of a recession, but with some “conditions?” We’d rather have our economy tank. Iran or Hezbollah anything? Absolutely not. Even Egypt tried to merge with Syria once, until Syria realized it was getting peacefully conquered (only slightly worse outcome than the butcher shop that Assad has created). There is so much wasted potential in the Levant, and it’s a grand shame.

Lebanon, and Beirut in particular, was once exhibit A for the success of multiculturalism. It wasn't. It collapsed in a blood bath. When I mentioned this before I was admonished and told Lebanon was wonderful. It isn't.

The modern liberal democracies, including our democratic republic, run on trust. Multicultural states have low levels of trust where tribalism rules.

Some useful idiots would love to see the USA turned into a multicultural hellhole.

Early 20th century Germany was once exhibit A for the success for monoculturalism. It wasn't. It collapsed in a blood bath. When I mentioned this before I was admonished and told early Germany was wonderful. It isn't.

The modern liberal democracies, including our democratic republic, run on trust. Monocultural states have low levels of trust where tribalism rules.

Some useful idiots would love to see the USA turned into a monocultural hellhole.

In Beirut at the moment visiting in law's. Spent an hour yesterday in the machine room fiddling with the complex array of circuits installed to manage a mix of incoming mains and generator power (it failed to automatically switch over when the mains came back on line). It is staggering how much physical and human capital has been wasted on building a workaround for a problem that is dead easy to fix technically and economically but impossible politically. Corrupt doesn't seem an adequate word for people who do this to their own country. Evil is a better fit.

Indeed, and as Alaa Al Din comments, the country has people with the skills to solve this, but cannot due to the corruption and power plays both internal and international.

It all makes me a little more pessimistic about Lebanon than I was before. And maybe of the Middle East in general.

The Middle East is where ideology goes to die.

Sounds like the situation California and others are pushing - every man their own local power company, albeit with rooftop solar rather than diesel generators

'every man their own local power company'

That is not how it works in Germany, though. Anyone is welcome to generate power, but if you are connected to the grid, you have to pay a separate charge for that connection. Which is why part of my electric bill has absolutely nothing to do with how (or by whom or where, for that matter) electricity is generated, but simply in providing electricity through a grid.

Which means that a German consumer is free to purchase their electricity from any source they wish, at whatever price that source is willing to offer, and there is nothing that the local power company can do to prevent it. Yes, this is partially sleight of hand, from one perspective - but it is the power grid that balances this out, not the formerly monopoly owners of the local grid denying any possibility to buy power from other power generators.

Almost as if electricity generation is not a natural monopoly, unless the company doing the generation owns the power lines that make up the grid.

Of course, the former German local electric monopolies fought tooth and nail against this way of allowing market forces to operate in terms of decoupling the natural monopoly of a grid from their business model of charging their own price for the power they generated, while shielding themselves from any competition.

Where I live power generation and distribution/delivery are provided by separate companies. Distribution is indeed a natural geographic monopoly, but one chooses among a number of merchant power providers. Works pretty well.

It’s a bit more technically complex if one is conditionally grid connected and generates a fraction of your own power.

Germans pay two to three times as much for electricity than Americans or Canadians. Like Lebanon, it's an example of political imperatives overriding technical considerations.

An interesting comparison is pc (%) of household disposable income expended on electricity: Germany 2.13%, US average 2.15% (Min Washington 1.2%, Max Hawaii 4.5%).

The other curious thing about Germany is a ~20% difference between the cheapest and the most expensive region for electricity.

The Northeast Coast and California are not that far from German electricity prices. If the US average price is taken down by Idaho or Utah, who cares?

The average retail price of electricity in California was 16.06 cents per kWh in 2017 (latest figures available).

In Germany, households paid 30.00 euro cents per kWh in the second semester of 2018 (latest figures available).

So, no. German retail consumers pay twice as much as California. And California pays more than any other state except Alaska, Hawaii and several New England states.

The 16 cents figure per kWh doesn't match reality here in San Diego. There are two parts on the bill: electricity delivery and electricity generation. electricity generation has 3 tiers : Super off peak ( 12 am to 6 am at 5.3 cents per kWh ), off- peak ( 10.4 cents), and on-peak ( 32.2 cents).
Across all 3 tiers electricity delivery costs 23.6 cents per kWh.
So even in the best case: I consume only at night and store it in a battery for use during the day, I pay 28.9 cents per kWh. On top of this are various bond charges and fees added to the bill and a base charge adjustment credit.
Last month I used 1156 kWh and paid $448.34 or 38.7 cents per kWh. I calculate that if you stay entirely within your baseline allowance( it's small but you benefit from the credit) and consume only at night , you still pay 20 cents per kWh.

Ouch! 7.5 cents for generation and 5 cents for distribution, no tiers, for me.

Next thing you know, consumers will demand their own washing machines!

(It's really dumb to think that grid-integrated solar is grid-oppositional solar power. It's like saying we can't have washing machines, and should use the laundromat like a normal person.)

((Not to say that every home installation is well thought or maintained.))

I suppose one could also have their own water well and septic tank, but most people would rather not bother.

Household rooftop solar is not really the best solution, for most people in most places. There are exceptions.

A static analysis isn't really that useful. You could have said "not the best solution" five years ago and it would be more true then than now. You could try to say it five years hence, when it will be even less true.

"You could try to say it five years hence, when it will be even less true."

No! The economics are making solar panels cheaper, thus even more favorable to large scale installations where the labor and other material costs can benefit from economies of scale.

Did you misread me? The cheaper solar solutions become, the more they compete with any other roofing material. They become boring.

No I didn't read you, you are just wrong. And trivially wrong. When solar cell costs were very high, then the other costs of installing a solar cell system were relatively less important.

So, for example, take the case of a system where solar panels were 60%, other hardware was 20% and installation was 20%. Then assume that roof installation was twice the price. A roof installs total costs would only be 20% larger. Furthermore, if a residential customer could get a large tax credit, this often would be larger than the differential.

Now, assume that solar cells have become much cheaper. In the new scenario, solar panels are 10% of the cost, hardware is 40% of the cost and installation is 50% of the cost. Roof installs are still twice the installation price. Therefore the total differential is now 50%.

Cheaper solar panels make the economics more favorable towards a greenfield installation versus a roof retro fit.

I didn't misread you...

You didn't read the link neither.

There is no lower limit on solar cost.

Everybody needs a roof.

Sigh, you really are too dumb to be posting here.

There's nothing in the link that contradicts my point of view. Indeed, the link says that Solar shingles are more expensive than standard solar installations.

"solar shingles are typically more expensive to install than traditional solar panels"

Which was exactly the point I was making.


He insults me, and then bets everything on no further decline on solar energy (solar shingle) prices.

I can't determine if this is the Troll or if the real anonymous is this dumb and has reading comprehension this poor.

" then bets everything on no further decline on solar energy (solar shingle) prices."

Clearly any decline in the price of solar energy will favor the form that has lower installation & maintenance costs and produces more power. Indeed, I expect further declines in solar energy costs which will inevitably lead to greater usage. Which will overwhelmingly be produced in centralized field installations, that don't have to deal with roofs with bad angles, that are relatively small and where every installation has to be a custom job.

Solar farms get the wholesale electricity price. distributed solar avoids having to pay the retail cost. There are high electricity prices here in South Australia so around 10% of total electricity use is from rooftop solar.

Indeed, and that's perfectly logical. I would expect some percentage of electricity to come from rooftop solar, but outside of hefty subsidies (or other extraneous factors) the numbers should favor concentrated solar. As you point out, in S. Australia, rooftop solar is only about 10% of the total.

I don't really understand it either. There are so many silly things people spend money on, in the gadget way. Why is rooftop solar so egregious?

Half the ranches in Texas have a solar-powered gate. Is that stupid?

Two households of my nuclear family were without power after a storm for 3 weeks. (This was actually least hard on my aged parents, whose larder tends to be well-stocked with crackers, canned soup, dried chipped beef and the like.) Like most of his buddies, my brother couldn't live without A/C and went out and bought a generator. Later he just gave it away, just as well since before too many years passed he lost most of his possessions to Harvey.

Without the solar would you have to dig a trench to run electricity out to the gate?

If there was an electric line somewhere around.

Right. One of the early adopter scenarios for solar is when a relatively small load is relatively far from convenient power.

"Is that stupid?"

Why does one need an electric gate at all? Were there no ranch gates before solar panels?

Careful, Bob. Next thing you know you'll be recommending people don sweaters, and talking about negawatts. And then the electrons will fly.

"Why does one need an electric gate at all?"
Cows don't have thumbs.

"Why is rooftop solar so egregious?"

Because it doesn't make much sense economically and is largely a product of government subsidies. Texas ranchers building large arrays in cattle fields makes a lot of sense. Climbing up on a roof in a suburb to put a solar array on a roof with a non-optimal angle and installing a relatively small panel makes very little economical sense.

If it’s subsidized then cost is less relevant, since it’s other people’s money.

+1, this is actually a valid point. If government keeps subsidizing residential solar installs, then yes, the cost differential is far less relevant.

I'm sure I'm missing a point somewhere, but why not just give up on state owned generation? Lots of other electricity markets run fully privately owned and operated generation markets, even if transmission and distribution is more complicated.

More political dynamics. If nothing else, the public utility is presumably party of some minister's portfolio, and it likely generates jobs as much as it does kilowatts.

Well if that's the case then it's just more embarrassing than economically harmful.

What's that Friedman joke? If it's a make work scheme why not throw away the shovels and just give them spoons?

I suspect this is old news. A couple of years ago in an Antigua Forum (organized by the great libertarians of the Universidad Francisco Marroquin in Guatemala) some young Lebanese working in a liberal think-tank showed up and asked for ideas to solve the problems. Although I do not know the details because I did not spend time in that specific project, my understanding is that they managed to implement a policy change that gave the private generators the right incentives and the problem is now solved. This is a recent note on it from the Atlas network:
The guy that was in charge of the group from Lebanon is a congenial young fellow called Mardini, he came across as a pragmatic (classical) liberal.

Deregulation of electricity and gas in many states (California, Connecticut, the District of Columbia, Delaware, Illinois, Massachusetts, Maryland, Maine, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Texas) has allowed utility companies in one region to poach customers in other regions; deregulation ended the monopoly that regulated electricity and gas companies once had in those states and regions. No, deregulation doesn't mean that every utility company competing in a state or region has its own transmission lines. How deregulation of electricity and gas can actually work is a mystery to me, and apparently a mystery to the Lebanese.

It’s a state owned company. The state owns the actual means of production. That’s certainly not deregulation.

Sometimes you’re not just somewhat wrong, you asymptote to the literal opposite of what is happening.

What? The blog post is about private generators competing with the state-owned electricity company. Since the competition is the result of corruption rather than official policy, I suspect the competing providers don't share transmission lines like they do in America. Indeed, I suspect that, like any good mafia, the private generators have territorial rights that are violated at a very high price to the violator. To improve electricity service in Lebanon, Lebanon should either go with the monopoly model or the public/private competition model. Lebanon appears to have chosen neither. Our host often defends the monopoly model (when the monopoly is private), so maybe the point of Cowen's blog post is a shout-pout for monopoly. What does What know?

Oh so you didn’t read the link.

What's an idiot?

Perhaps we can be excused if we made a freudian slip in reading it as" the government mafia in Lebanon."

" the government mafia in Lebanon."


all national governments begin or degenerate into forms of organized crime.

the "corruption" problem in Lebanon is a polite euphemism for organized criminals running the formal government structure there.

government is inherently dangerous and easily gets out of ciizen control -- the course of human history demonstrates this consistently, but the lesson is rarely learned. Power Corrupts and governments are the most powerful entities in human society.

No corruption in America? Our president is the poster child of corruption. His mentor was consigliere for the mafia.

Come on, how could Stable Genius possibly be corrupt? He's an innocent baby! Any blunders happen in the US, he's the first on Twitter to say "wasn't me".

"Our president was the poster child of corruption. His mentor was consigliere for the mafia." Now he's living on Martha's Vineyard with all the other retired, corrupt politicians.

Hahahahahahahaha! Oh man you got him good! He meant Trump, but by switching 'is' to 'was' you made his own comment about Obama! Take that, shitlib!


Maybe we,should import that generator mafia. We don't have enough problems the way things are.

Why, again, is Lebanon not one of the per capita consumers of solar power?

If solar is truly competitive with industrial scale conventional power generation, roof top installations should handily beat a network built off small scale, inefficient generators.

Instead, something like 0.4% of Lebanese power (per Google) is coming from solar.

When you product cannot out compete inefficient diesel generators with prices kept artificially high via corruption, I am not sure why I should expect it to be able to dislodge the vast bulk of coal generation throughout the world in anything like a timely fashion.

Human progress is inextricably tied to energy. Cave men ate their energy. Slightly more advanced men harnessed animals. And so on until you get to the ultimate efficiency and convenience, energy that flows right out of the wall.

It's a tragedy that so many nations can't get critical mass or infrastructure to make it work.

Robert Bryce is onto something.

Bonus link: solar panels that work at night. Not really, but kinda. Definitely an interesting possibility.

Firewood is solar power. So is coal. Solar panels are high-tech inventions that will only generate enough power to support a caveman lifestyle. Ironic.

I have solar power just outside of Boston that generates over 100% of the power needed to run a modern household with standard electric appliances including central air. I feed the surplus into the power grid and the electric company pays me about a $1,000 a year for the surplus.

Single family house with what sq ft of panels?

Heat too?

I should have put fire before animal domestication!

I didn't want to get into the whole thing, but fire, then water and windmills, then steam, then electricity and internal combustion come on line. Geothermal as a footnote.

Of these, electricity is the best, and photovoltaic is the most elegant generation solution so far. This other thing (at the link, a thermal-electric effect generating power from the cooling sky) would be even better.

"Solar panels are high-tech inventions that will only generate enough power to support a caveman lifestyle. Ironic."

No, that's not true. Solar power at high rates of efficiency and low costs combined with cheap power storage will certainly support an industrial civilization. Granted, solar power cells have only reached those first two qualifications in this decade. But they have reached that level.

What's lacking is cheap power storage. Until we have that, solar will primarily be used for daily peak load shaving. But that still a substantial benefit. We should make use of solar where ever it is the cheapest solution and doesn't cause other issues (intermittency, etc).

The same applies for wind power of course.

Took a ride in one of those American Telsa S electric cars the other day. It has a 100 kilowatt-hour battery and with a three phase home inverter can charge at 23 kilowatts. If Tesla had the same philosophy as Nissan it would be possible to discharge power to the grid at that rate. Its owner charges it from his home solar panels during the day. Even if electric cars only act as loads on the grid they have a lot of potential. We had some brief periods of negative electricity prices yesterday afternoon, so clearly there's an opportunity.

"If Tesla had the same philosophy as Nissan it would be possible to discharge power to the grid at that rate."

The battery in an electric car is expensive compared to a bulk storage battery and has a finite number of charge cycles. So, powering the grid would almost certainly be a bad deal for the consumer outside some kind of emergency.

"Even if electric cars only act as loads on the grid they have a lot of potential. "

Indeed, assuming that electric car charging is flexible enough to match cheap electricity pricing then that would obviously be an easy path to increasing the percentage of solar/wind on the grid.

The biggest constraints would be vehicle owners having the opportunity to charge during the middle of the day when a lot of them will be working and ensuring that day time pricing is flexible thus making the charging economically attractive.

Wholesale electricity prices can go over $10 US a kilowatt-hour here so if the car battery discharged 20 kilowatts to the grid for only 10 hours a year at those prices that would be $2,000 revenue for what should be under $20 wear and tear on the battery.

If rooftop solar gets competitive can it solve this problem or will the "mafia" go around destroying them?

BTW when I lived in Honduras the electricity would go out for hours in the middle of most days.

That's one of the exception use cases - unreliable grid power - where household solar makes sense.

Another is no grid available - I had a friend who built a house outside grid coverage about 10 yeas ago. The local power company would extend a line to the new house, for about $25,000. He found it cheaper to put in solar, and with judicious use of power, it worked quite well. It would be cheaper today, or alternativley for the same dollars he could put in more reserve capacity and not have to pay attention to how much AC he used.

If you live in an area prone to extended power outages (say Florida) it might also be worth getting a 50W panel and a small battery as emergency prep. You can easily generate enough power to run LEDs, and with a little more panel capacity maybe a small fan during the day.

It would be difficult to go around door to door destroying or taking solar panels. Gangsters generally can generally only engage in a limited amount of violence and destruction before there is push back, which might come from police or people who are having their panels destroyed supporting a rival gang.

In many countries with unreliable grids a solar panel and a couple of lead acid batteries are common for running lights and charging phones. But that's still usually a middle class item in these sorts of places, even thought those components could be got second hand here for what seems like a trivial amount of money to me.

So that is what ecocrazies want America to become. Lebanon! That is why they wage war againat coal.

It just boggles my mind that people can look at two horizons, one with a belching coal plant, and one with graceful windmills .. and choose the coal plant.

You’re responding to Thiago’s new persona, a Trump supporting anti-Semitic American.

Unless you’re both Thiago.

I am a member of the Lebanese Royal Family.

It is not true. I am an American Trump supporter. I am not anti-Semitic, I just believe in defending America's interests first.

He dropped the Brazil boosterism to focus on being racist and anti-Semitic. At least it's a start.

Windmills could annoy Don Quixote, but they can quench America's thrist for energy. Horizons won't defeat China.

If only there was some economic concept available to you that would help. Anyone have any suggestions for our white privileged brother?

I'll take Negative Externalities for $200, Alex.

It helps if you refer to wind turbines as rare-earth-expending noise-belching bird grinders. Some people want them less after that, I kind of want them more. It's pretty metal.

My name is Benni and I am a member of the Lebanese Royal Family.

If America would build an electrical grid for us, we would be happy to investigate the Bidens.

Contact information enclosed.

Nasrallah posts on MR! Cool.

Is this parody anonymous making a parody or actual anonymous making a parody?

Or is the line blurred past the point of stupidity.

Do you really deserve to know?

(All heck is breaking loose on the White House lawn. Recommended.)

I’m going with real anonymous making a parody.

This is similar to the water tanker mafia in newly developed urban areas of India. The local government is too corrupt to provide a direct piped water and many building complexes are totally reliant on water tankers for supply (which are typically owned by the local builder/ gangster/ politician mafia)

That is about to change, as the law giving a monopoly on legal generation (there is plenty of illegal generation, with the normal characteristics of black markets) is changing, thanks to the work of the Lebanese Institute for Market Studies:

Fascinating. Most of us will recognize this as a good idea in principle and in theory. But not necessarily in practice, given the alleged "mafia" control of private generation, and thinking of how Enron exploited California's attempt to deregulate its electricity markets. I guess you could say that in the long run Enron got its just desserts, yay for private markets, but at the cost of severe short run costs and disruptions.

Legalization and open markets destroy the power of the mafia. It’s not much different from the alcohol market.

The Enron disaster has little to do with electricity, and everything to do with fraud by unscrupulous people who cleverly manipulated an insanely complex corporate tax code to cheat their own shareholders, who lost everything. (They also cooled an outside accounting firm, the SEC, Paul Krugman, and many others.)

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