IDEAS home Printed from https://ideas.repec.org/a/eee/eecrev/v108y2018icp259-279.html
   My bibliography  Save this article

On the economics of electrical storage for variable renewable energy sources

Author

Listed:
  • Zerrahn, Alexander
  • Schill, Wolf-Peter
  • Kemfert, Claudia

Abstract

The use of renewable energy sources is a major strategy to mitigate climate change. Yet Sinn (2017) argues that excessive electrical storage requirements limit the further expansion of variable wind and solar energy. We question, and alter, strong implicit assumptions of Sinn’s approach and find that storage needs are considerably lower, up to two orders of magnitude. First, we move away from corner solutions by allowing for combinations of storage and renewable curtailment. Second, we specify a parsimonious optimization model that explicitly considers an economic efficiency perspective. We conclude that electrical storage is unlikely to limit the transition to renewable energy.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:eecrev:v:108:y:2018:i:c:p:259-279
    DOI: 10.1016/j.euroecorev.2018.07.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014292118301107
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.euroecorev.2018.07.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alexander E. MacDonald & Christopher T. M. Clack & Anneliese Alexander & Adam Dunbar & James Wilczak & Yuanfu Xie, 2016. "Future cost-competitive electricity systems and their impact on US CO2 emissions," Nature Climate Change, Nature, vol. 6(5), pages 526-531, May.
    2. Blanco, Herib & Faaij, André, 2018. "A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1049-1086.
    3. 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.
    4. May, Nils, 2017. "The impact of wind power support schemes on technology choices," Energy Economics, Elsevier, vol. 65(C), pages 343-354.
    5. Wolf-Peter Schill, Alexander Zerrahn, and Friedrich Kunz, 2017. "Prosumage of solar electricity: pros, cons, and the system perspective," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    6. Richardson, David B., 2013. "Electric vehicles and the electric grid: A review of modeling approaches, Impacts, and renewable energy integration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 19(C), pages 247-254.
    7. Pfenninger, Stefan & Hirth, Lion & Schlecht, Ingmar & Schmid, Eva & Wiese, Frauke & Brown, Tom & Davis, Chris & Gidden, Matthew & Heinrichs, Heidi & Heuberger, Clara & Hilpert, Simon & Krien, Uwe & Ma, 2018. "Opening the black box of energy modelling: Strategies and lessons learned," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 63-71.
    8. Haller, Markus & Ludig, Sylvie & Bauer, Nico, 2012. "Decarbonization scenarios for the EU and MENA power system: Considering spatial distribution and short term dynamics of renewable generation," Energy Policy, Elsevier, vol. 47(C), pages 282-290.
    9. Schill, Wolf-Peter, 2014. "Residual load, renewable surplus generation and storage requirements in Germany," Energy Policy, Elsevier, vol. 73(C), pages 65-79.
    10. Fürsch, Michaela & Hagspiel, Simeon & Jägemann, Cosima & Nagl, Stephan & Lindenberger, Dietmar & Tröster, Eckehard, 2013. "The role of grid extensions in a cost-efficient transformation of the European electricity system until 2050," Applied Energy, Elsevier, vol. 104(C), pages 642-652.
    11. Sinn, Hans-Werner, 2017. "Buffering volatility: A study on the limits of Germany's energy revolution," European Economic Review, Elsevier, vol. 99(C), pages 130-150.
    12. 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.
    13. de Sisternes, Fernando J. & Jenkins, Jesse D. & Botterud, Audun, 2016. "The value of energy storage in decarbonizing the electricity sector," Applied Energy, Elsevier, vol. 175(C), pages 368-379.
    14. Bloess, Andreas & Schill, Wolf-Peter & Zerrahn, Alexander, 2018. "Power-to-heat for renewable energy integration: A review of technologies, modeling approaches, and flexibility potentials," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1611-1626.
    15. Ignacio J. Perez-Arriaga & Carlos Batlle, 2012. "Impacts of Intermittent Renewables on Electricity Generation System Operation," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    16. Edenhofer, Ottmar & Hirth, Lion & Knopf, Brigitte & Pahle, Michael & Schlömer, Steffen & Schmid, Eva & Ueckerdt, Falko, 2013. "On the economics of renewable energy sources," Energy Economics, Elsevier, vol. 40(S1), pages 12-23.
    17. Ueckerdt, Falko & Pietzcker, Robert & Scholz, Yvonne & Stetter, Daniel & Giannousakis, Anastasis & Luderer, Gunnar, 2017. "Decarbonizing global power supply under region-specific consideration of challenges and options of integrating variable renewables in the REMIND model," Energy Economics, Elsevier, vol. 64(C), pages 665-684.
    18. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    19. O. Schmidt & A. Hawkes & A. Gambhir & I. Staffell, 2017. "The future cost of electrical energy storage based on experience rates," Nature Energy, Nature, vol. 2(8), pages 1-8, August.
    20. 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.
    21. 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.
    22. Daniel S. Hamermesh, 2018. "Citations in Economics: Measurement, Uses, and Impacts," Journal of Economic Literature, American Economic Association, vol. 56(1), pages 115-156, March.
    23. Stefan Pfenninger, 2017. "Energy scientists must show their workings," Nature, Nature, vol. 542(7642), pages 393-393, February.
    24. Lund, Peter D. & Lindgren, Juuso & Mikkola, Jani & Salpakari, Jyri, 2015. "Review of energy system flexibility measures to enable high levels of variable renewable electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 785-807.
    25. Staffell, Iain & Pfenninger, Stefan, 2016. "Using bias-corrected reanalysis to simulate current and future wind power output," Energy, Elsevier, vol. 114(C), pages 1224-1239.
    26. Mathiesen, B.V. & Lund, H. & Connolly, D. & Wenzel, H. & Østergaard, P.A. & Möller, B. & Nielsen, S. & Ridjan, I. & Karnøe, P. & Sperling, K. & Hvelplund, F.K., 2015. "Smart Energy Systems for coherent 100% renewable energy and transport solutions," Applied Energy, Elsevier, vol. 145(C), pages 139-154.
    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. 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.
    3. 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, pages 973-987.
    4. Stefan Arens & Sunke Schlüters & Benedikt Hanke & Karsten von Maydell & Carsten Agert, 2020. "Sustainable Residential Energy Supply: A Literature Review-Based Morphological Analysis," Energies, MDPI, vol. 13(2), pages 1-28, January.
    5. Pahle, Michael & Schill, Wolf-Peter & Gambardella, Christian & Tietjen, Oliver, 2016. "Renewable Energy Support, Negative Prices, and Real-time Pricing," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 147-169.
    6. Sinn, Hans-Werner, 2017. "Buffering volatility: A study on the limits of Germany's energy revolution," European Economic Review, Elsevier, vol. 99(C), pages 130-150.
    7. Fabian Stöckl & Alexander Zerrahn, 2020. "Substituting Clean for Dirty Energy: A Bottom-Up Analysis," Discussion Papers of DIW Berlin 1885, DIW Berlin, German Institute for Economic Research.
    8. Soini, Martin Christoph & Parra, David & Patel, Martin Kumar, 2020. "Does bulk electricity storage assist wind and solar in replacing dispatchable power production?," Energy Economics, Elsevier, vol. 85(C).
    9. Lombardi, Francesco & Rocco, Matteo Vincenzo & Colombo, Emanuela, 2019. "A multi-layer energy modelling methodology to assess the impact of heat-electricity integration strategies: The case of the residential cooking sector in Italy," Energy, Elsevier, vol. 170(C), pages 1249-1260.
    10. Blanco, Herib & Faaij, André, 2018. "A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1049-1086.
    11. 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.
    12. Pietzcker, Robert C. & Ueckerdt, Falko & Carrara, Samuel & de Boer, Harmen Sytze & Després, Jacques & Fujimori, Shinichiro & Johnson, Nils & Kitous, Alban & Scholz, Yvonne & Sullivan, Patrick & Ludere, 2017. "System integration of wind and solar power in integrated assessment models: A cross-model evaluation of new approaches," Energy Economics, Elsevier, vol. 64(C), pages 583-599.
    13. Staffell, Iain & Pfenninger, Stefan, 2018. "The increasing impact of weather on electricity supply and demand," Energy, Elsevier, vol. 145(C), pages 65-78.
    14. de Guibert, Paul & Shirizadeh, Behrang & Quirion, Philippe, 2020. "Variable time-step: A method for improving computational tractability for energy system models with long-term storage," Energy, Elsevier, vol. 213(C).
    15. Jenkins, J.D. & Zhou, Z. & Ponciroli, R. & Vilim, R.B. & Ganda, F. & de Sisternes, F. & Botterud, A., 2018. "The benefits of nuclear flexibility in power system operations with renewable energy," Applied Energy, Elsevier, vol. 222(C), pages 872-884.
    16. 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.
    17. Wiese, Frauke & Schlecht, Ingmar & Bunke, Wolf-Dieter & Gerbaulet, Clemens & Hirth, Lion & Jahn, Martin & Kunz, Friedrich & Lorenz, Casimir & Mühlenpfordt, Jonathan & Reimann, Juliane & Schill, Wolf-P, 2019. "Open Power System Data – Frictionless data for electricity system modelling," Applied Energy, Elsevier, vol. 236(C), pages 401-409.
    18. Héctor Marañón-Ledesma & Asgeir Tomasgard, 2019. "Analyzing Demand Response in a Dynamic Capacity Expansion Model for the European Power Market," Energies, MDPI, vol. 12(15), pages 1-24, August.
    19. Claudia Gunther & Wolf-Peter Schill & Alexander Zerrahn, 2019. "Prosumage of solar electricity: tariff design, capacity investments, and power system effects," Papers 1907.09855, arXiv.org.
    20. Copp, David A. & Nguyen, Tu A. & Byrne, Raymond H. & Chalamala, Babu R., 2022. "Optimal sizing of distributed energy resources for planning 100% renewable electric power systems," Energy, Elsevier, vol. 239(PE).

    More about this item

    Keywords

    Variable renewable energy sources; Wind; Solar; Energy storage;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

    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:eee:eecrev:v:108:y:2018:i:c:p:259-279. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/eer .

    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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eer .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.