IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2107.13380.html
   My bibliography  Save this paper

Renewable Energy Targets and Unintended Storage Cycling: Implications for Energy Modeling

Author

Listed:
  • Martin Kittel
  • Wolf-Peter Schill

Abstract

To decarbonize the economy, many governments have set targets for the use of renewable energy sources. These are often formulated as relative shares of electricity demand or supply. Implementing respective constraints in energy models is a surprisingly delicate issue. They may cause a modeling artifact of excessive electricity storage use. We introduce this phenomenon as 'unintended storage cycling', which can be detected in case of simultaneous storage charging and discharging. In this paper, we provide an analytical representation of different approaches for implementing minimum renewable share constraints in models, and show how these may lead to unintended storage cycling. Using a parsimonious optimization model, we quantify related distortions of optimal dispatch and investment decisions as well as market prices, and identify important drivers of the phenomenon. Finally, we provide recommendations on how to avoid the distorting effects of unintended storage cycling in energy modeling.

Suggested Citation

  • Martin Kittel & Wolf-Peter Schill, 2021. "Renewable Energy Targets and Unintended Storage Cycling: Implications for Energy Modeling," Papers 2107.13380, arXiv.org, revised Sep 2021.
    • Handle: RePEc:arx:papers:2107.13380
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2107.13380
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pfenninger, Stefan & Keirstead, James, 2015. "Renewables, nuclear, or fossil fuels? Scenarios for Great Britain’s power system considering costs, emissions and energy security," Applied Energy, Elsevier, vol. 152(C), pages 83-93.
    2. Anke, Carl-Philipp & Möst, Dominik, 2021. "The expansion of RES and the EU ETS – valuable addition or conflicting instruments?," Energy Policy, Elsevier, vol. 150(C).
    3. Anke, Carl-Philipp & Hobbie, Hannes & Schreiber, Steffi & Möst, Dominik, 2020. "Coal phase-outs and carbon prices: Interactions between EU emission trading and national carbon mitigation policies," Energy Policy, Elsevier, vol. 144(C).
    4. Clemens Gerbaulet & Casimir Lorenz, 2017. "dynELMOD: A Dynamic Investment and Dispatch Model for the Future European Electricity Market," Data Documentation 88, DIW Berlin, German Institute for Economic Research.
    5. Luca Petricca & Per Ohlckers & Xuyuan Chen, 2013. "The Future of Energy Storage Systems," Chapters, in: Ahmed F. Zobaa (ed.), Energy Storage - Technologies and Applications, IntechOpen.
    6. Javier López Prol & Wolf-Peter Schill, 2021. "The Economics of Variable Renewable Energy and Electricity Storage," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 443-467, October.
    7. Knopf, Brigitte & Nahmmacher, Paul & Schmid, Eva, 2015. "The European renewable energy target for 2030 – An impact assessment of the electricity sector," Energy Policy, Elsevier, vol. 85(C), pages 50-60.
    8. Javier L'opez Prol & Wolf-Peter Schill, 2020. "The Economics of Variable Renewables and Electricity Storage," Papers 2012.15371, arXiv.org.
    9. Scholz, Yvonne & Gils, Hans Christian & Pietzcker, Robert C., 2017. "Application of a high-detail energy system model to derive power sector characteristics at high wind and solar shares," Energy Economics, Elsevier, vol. 64(C), pages 568-582.
    10. Mier, Mathias & Weissbart, Christoph, 2020. "Power markets in transition: Decarbonization, energy efficiency, and short-term demand response," Energy Economics, Elsevier, vol. 86(C).
    11. Helgeson, Broghan & Peter, Jakob, 2020. "The role of electricity in decarbonizing European road transport – Development and assessment of an integrated multi-sectoral model," Applied Energy, Elsevier, vol. 262(C).
    12. Stöckl, Fabian & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Optimal supply chains and power sector benefits of green hydrogen," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11.
    13. Özdemir, Özge & Hobbs, Benjamin F. & van Hout, Marit & Koutstaal, Paul R., 2020. "Capacity vs energy subsidies for promoting renewable investment: Benefits and costs for the EU power market," Energy Policy, Elsevier, vol. 137(C).
    14. Schill, Wolf-Peter & Zerrahn, Alexander, 2018. "Long-run power storage requirements for high shares of renewables: Results and sensitivities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 83(C), pages 156-171.
    15. Paul L. Joskow, 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies," American Economic Review, American Economic Association, vol. 101(3), pages 238-241, May.
    16. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    17. Osorio, Sebastian & Pietzcker, Robert C. & Pahle, Michael & Edenhofer, Ottmar, 2020. "How to deal with the risks of phasing out coal in Germany," Energy Economics, Elsevier, vol. 87(C).
    18. Zerrahn, Alexander & Schill, Wolf-Peter & Kemfert, Claudia, 2018. "On the economics of electrical storage for variable renewable energy sources," European Economic Review, Elsevier, vol. 108(C), pages 259-279.
    19. Dagoumas, Athanasios S. & Koltsaklis, Nikolaos E., 2019. "Review of models for integrating renewable energy in the generation expansion planning," Applied Energy, Elsevier, vol. 242(C), pages 1573-1587.
    20. Gils, Hans Christian & Scholz, Yvonne & Pregger, Thomas & Luca de Tena, Diego & Heide, Dominik, 2017. "Integrated modelling of variable renewable energy-based power supply in Europe," Energy, Elsevier, vol. 123(C), pages 173-188.
    21. Zerrahn, Alexander & Schill, Wolf-Peter, 2017. "Long-run power storage requirements for high shares of renewables: review and a new model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 1518-1534.
    22. Hirth, Lion, 2013. "The market value of variable renewables," Energy Economics, Elsevier, vol. 38(C), pages 218-236.
    23. Schill, Wolf-Peter, 2014. "Residual load, renewable surplus generation and storage requirements in Germany," Energy Policy, Elsevier, vol. 73(C), pages 65-79.
    24. Richter, Jan, 2011. "DIMENSION - A Dispatch and Investment Model for European Electricity Markets," EWI Working Papers 2011-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    25. T. Brown & L. Reichenberg, 2020. "Decreasing market value of variable renewables can be avoided by policy action," Papers 2002.05209, arXiv.org, revised May 2021.
    26. Ueckerdt, Falko & Brecha, Robert & Luderer, Gunnar & Sullivan, Patrick & Schmid, Eva & Bauer, Nico & Böttger, Diana & Pietzcker, Robert, 2015. "Representing power sector variability and the integration of variable renewables in long-term energy-economy models using residual load duration curves," Energy, Elsevier, vol. 90(P2), pages 1799-1814.
    27. Martin Kittel & Leonard Goeke & Claudia Kemfert & Pao-Yu Oei & Christian von Hirschhausen, 2020. "Scenarios for Coal-Exit in Germany—A Model-Based Analysis and Implications in the European Context," Energies, MDPI, vol. 13(8), pages 1-19, April.
    28. Brown, T. & Reichenberg, L., 2021. "Decreasing market value of variable renewables can be avoided by policy action," Energy Economics, Elsevier, vol. 100(C).
    29. Schill, Wolf-Peter, 2020. "Electricity Storage and the Renewable Energy Transition," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 4(10), pages 2059-2064.
    30. Gaete-Morales, Carlos & Kittel, Martin & Roth, Alexander & Schill, Wolf-Peter, 2021. "DIETERpy: A Python framework for the Dispatch and Investment Evaluation Tool with Endogenous Renewables," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 15.
    31. Brown, T. & Schlachtberger, D. & Kies, A. & Schramm, S. & Greiner, M., 2018. "Synergies of sector coupling and transmission reinforcement in a cost-optimised, highly renewable European energy system," Energy, Elsevier, vol. 160(C), pages 720-739.
    32. Eising, Manuel & Hobbie, Hannes & Möst, Dominik, 2020. "Future wind and solar power market values in Germany — Evidence of spatial and technological dependencies?," Energy Economics, Elsevier, vol. 86(C).
    33. Zhou, Shan & Solomon, Barry D., 2020. "Do renewable portfolio standards in the United States stunt renewable electricity development beyond mandatory targets?," Energy Policy, Elsevier, vol. 140(C).
    34. Simon Hilpert & Franziska Dettner & Ahmed Al-Salaymeh, 2020. "Analysis of Cost-Optimal Renewable Energy Expansion for the Near-Term Jordanian Electricity System," Sustainability, MDPI, vol. 12(22), pages 1-21, November.
    35. Felix Böing & Anika Regett, 2019. "Hourly CO 2 Emission Factors and Marginal Costs of Energy Carriers in Future Multi-Energy Systems," Energies, MDPI, vol. 12(12), pages 1-32, June.
    36. Katharine Ricke & Laurent Drouet & Ken Caldeira & Massimo Tavoni, 2018. "Country-level social cost of carbon," Nature Climate Change, Nature, vol. 8(10), pages 895-900, October.
    37. Ueckerdt, Falko & Hirth, Lion & Luderer, Gunnar & Edenhofer, Ottmar, 2013. "System LCOE: What are the costs of variable renewables?," Energy, Elsevier, vol. 63(C), pages 61-75.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Javier L'opez Prol & Wolf-Peter Schill, 2020. "The Economics of Variable Renewables and Electricity Storage," Papers 2012.15371, arXiv.org.
    2. Kirchem, Dana & Schill, Wolf-Peter, 2023. "Power sector effects of green hydrogen production in Germany," Energy Policy, Elsevier, vol. 182(C).
    3. van Ouwerkerk, Jonas & Gils, Hans Christian & Gardian, Hedda & Kittel, Martin & Schill, Wolf-Peter & Zerrahn, Alexander & Murmann, Alexander & Launer, Jann & Torralba-Díaz, Laura & Bußar, Christian, 2022. "Impacts of power sector model features on optimal capacity expansion: A comparative study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    4. Ruhnau, O. & Bucksteeg, M. & Ritter, D. & Schmitz, R. & Böttger, D. & Koch, M. & Pöstges, A. & Wiedmann, M. & Hirth, L., 2022. "Why electricity market models yield different results: Carbon pricing in a model-comparison experiment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    5. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    6. Gerbaulet, Clemens & von Hirschhausen, Christian & Kemfert, Claudia & Lorenz, Casimir & Oei, Pao-Yu, 2019. "European electricity sector decarbonization under different levels of foresight," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 141, pages 973-987.
    7. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    8. Gils, Hans Christian & Gardian, Hedda & Kittel, Martin & Schill, Wolf-Peter & Zerrahn, Alexander & Murmann, Alexander & Launer, Jann & Fehler, Alexander & Gaumnitz, Felix & van Ouwerkerk, Jonas & Bußa, 2022. "Modeling flexibility in energy systems — comparison of power sector models based on simplified test cases," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    9. Glenk, Gunther & Reichelstein, Stefan, 2021. "Intermittent versus dispatchable power sources: An integrated competitive assessment," ZEW Discussion Papers 21-065, ZEW - Leibniz Centre for European Economic Research.
    10. Fabian Stöckl & Alexander Zerrahn, 2023. "Substituting Clean for Dirty Energy: A Bottom-Up Analysis," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(3), pages 819-863.
    11. Ruhnau, Oliver, 2020. "Market-based renewables: How flexible hydrogen electrolyzers stabilize wind and solar market values," EconStor Preprints 227075, ZBW - Leibniz Information Centre for Economics.
    12. Matsuo, Yuhji & Endo, Seiya & Nagatomi, Yu & Shibata, Yoshiaki & Komiyama, Ryoichi & Fujii, Yasumasa, 2020. "Investigating the economics of the power sector under high penetration of variable renewable energies," Applied Energy, Elsevier, vol. 267(C).
    13. Wehrle, Sebastian & Gruber, Katharina & Schmidt, Johannes, 2021. "The cost of undisturbed landscapes," Energy Policy, Elsevier, vol. 159(C).
    14. Geoffrey J. Blanford & Christoph Weissbart, 2019. "A Framework for Modeling the Dynamics of Power Markets – The EU-REGEN Model," ifo Working Paper Series 307, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    15. Zerrahn, Alexander & Schill, Wolf-Peter & Kemfert, Claudia, 2018. "On the economics of electrical storage for variable renewable energy sources," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 108, pages 259-279.
    16. Ruhnau, Oliver, 2022. "How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen electrolyzers," Applied Energy, Elsevier, vol. 307(C).
    17. Mowers, Matthew & Mignone, Bryan K. & Steinberg, Daniel C., 2023. "Quantifying value and representing competitiveness of electricity system technologies in economic models," Applied Energy, Elsevier, vol. 329(C).
    18. Say, Kelvin & Schill, Wolf-Peter & John, Michele, 2020. "Degrees of displacement: The impact of household PV battery prosumage on utility generation and storage," Applied Energy, Elsevier, vol. 276(C).
    19. Klie, Leo & Madlener, Reinhard, 2022. "Optimal configuration and diversification of wind turbines: A hybrid approach to improve the penetration of wind power," Energy Economics, Elsevier, vol. 105(C).
    20. Niina Helistö & Juha Kiviluoma & Hannele Holttinen & Jose Daniel Lara & Bri‐Mathias Hodge, 2019. "Including operational aspects in the planning of power systems with large amounts of variable generation: A review of modeling approaches," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(5), September.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2107.13380. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.