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Pumped storage and cost saving

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  • Crampes, Claude
  • Moreaux, Michel

Abstract

The pump storage technique allows the use of cheap thermal electricity at periods of low demand to restore water resources that can be used to generate electricity at periods of peak demand. When the thermal plant and the hydro plant are managed by the same operator, the two plants are used in an efficient way to substitute low cost fuel for high cost fuel. The paper first analyzes the efficient use of the technology when the outputs at each period are given. We determine the frontier between the storage and no-storage solutions and its sensibility to cost variations. We then determine the optimal dispatch given the intertemporal preferences of electricity consumers. The model gives emphasis to the economic driver of the technology that is the net social gain from transferring social surplus from off peak to peak period.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 32 (2010)
Issue (Month): 2 (March)
Pages: 325-333

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Handle: RePEc:eee:eneeco:v:32:y:2010:i:2:p:325-333

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Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: Water resource Pumping Hydroelectricity Cost saving;

References

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  1. Anthony Horsley & Andrew J. Wrobel, 2000. "Efficiency rents of pumped-storage plants and their uses for operation and investment decisions," LSE Research Online Documents on Economics 19336, London School of Economics and Political Science, LSE Library.
  2. Severin Borenstein & Stephen P. Holland, 2003. "On the Efficiency of Competitive Electricity Markets With Time-Invariant Retail Prices," NBER Working Papers 9922, National Bureau of Economic Research, Inc.
  3. Brian K. Edwards & Silvio J. Flaim & Richard E. Howitt, 1999. "Optimal Provision of Hydroelectric Power under Environmental and Regulatory Constraints," Land Economics, University of Wisconsin Press, vol. 75(2), pages 267-283.
  4. Joskow, Paul L & Tirole, Jean, 2007. "Reliability and Competitive Electricity Markets," CEPR Discussion Papers 6121, C.E.P.R. Discussion Papers.
  5. Tjalling C. Koopmans, 1957. "Water Storage Policy in a Simplified Hydroelectric System," Cowles Foundation Discussion Papers 26, Cowles Foundation for Research in Economics, Yale University.
  6. Horsley, Anthony & Wrobel, Andrew J., 2007. "Profit-maximizing operation and valuation of hydroelectric plant: A new solution to the Koopmans problem," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 938-970, March.
  7. Crampes, C. & Moreaux, M., 2001. "Water resource and power generation," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 975-997, May.
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Citations

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Cited by:
  1. Muche, Thomas, 2014. "Optimal operation and forecasting policy for pump storage plants in day-ahead markets," Applied Energy, Elsevier, vol. 113(C), pages 1089-1099.
  2. Loisel, Rodica & Mercier, Arnaud & Gatzen, Christoph & Elms, Nick & Petric, Hrvoje, 2010. "Valuation framework for large scale electricity storage in a case with wind curtailment," Energy Policy, Elsevier, vol. 38(11), pages 7323-7337, November.
  3. Nyamdash, Batsaikhan & Denny, Eleanor, 2011. "The impact of electricity storage on wholesale electricity prices," MPRA Paper 34941, University Library of Munich, Germany.
  4. Ming, Zeng & Junjie, Feng & Song, Xue & Zhijie, Wang & Xiaoli, Zhu & Yuejin, Wang, 2013. "Development of China's pumped storage plant and related policy analysis," Energy Policy, Elsevier, vol. 61(C), pages 104-113.
  5. Steffen, Bjarne & Weber, Christoph, 2013. "Efficient storage capacity in power systems with thermal and renewable generation," Energy Economics, Elsevier, vol. 36(C), pages 556-567.
  6. Durmaz, Tunc, 2014. "Energy Storage and Renewable Energy," Discussion Paper Series in Economics 18/2014, Department of Economics, Norwegian School of Economics.
  7. Nyamdash, Batsaikhan & Denny, Eleanor & O'Malley, Mark, 2010. "The viability of balancing wind generation with large scale energy storage," Energy Policy, Elsevier, vol. 38(11), pages 7200-7208, November.
  8. Ambec, Stefan & Crampes, Claude, 2012. "Electricity provision with intermittent sources of energy," Resource and Energy Economics, Elsevier, vol. 34(3), pages 319-336.

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