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Electric Vehicles in Imperfect Electricity Markets: A German Case Study

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  • Wolf-Peter Schill
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    Abstract

    We analyze the impacts of a hypothetical fleet of plug-in electric vehicles on the imperfectly competitive German electricity market with a game-theoretic model. Electric vehicles bring both additional demand and additional storage capacity to the market. We determine their effects on prices, welfare, and electricity generation for various cases with different players being in charge of vehicle operations. We find that vehicle loading increases generator profits, but decreases consumer surplus. If excess vehicle batteries can be used for storage, welfare results are reversed: generating firms suffer from the price-smoothing effect of additional storage, whereas consumers benefit despite increasing overall demand. Results however depend on the player being in charge of storage operations, and on battery degradation costs. Strategic players tend to underutilize the storage capacity of the vehicle fleet, which may have negative welfare implications. In contrast, we find a small market power mitigating effect of electric vehicle recharging on oligopolistic generators. Overall, electric vehicles are unlikely to be a relevant source of market power in Germany.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.364293.de/dp1084.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1084.

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    Length: 28 p.
    Date of creation: 2010
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp1084

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    Related research

    Keywords: Electric Vehicles; Vehicle-to-Grid; Arbitrage; Electric Power Markets; Market power;

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    References

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    1. Göransson, Lisa & Karlsson, Sten & Johnsson, Filip, 2010. "Integration of plug-in hybrid electric vehicles in a regional wind-thermal power system," Energy Policy, Elsevier, vol. 38(10), pages 5482-5492, October.
    2. Ali Hortaçsu & Steven L. Puller, 2008. "Understanding strategic bidding in multi-unit auctions: a case study of the Texas electricity spot market," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 86-114.
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    Cited by:
    1. Birgit Aigner-Walder & Thomas Döring, 2012. "Zukunftsperspektiven der Elektromobilität - Treibende Faktoren und Hemmnisse in ökonomischer Sicht," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 38(1), pages 103-132.

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