IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v160y2022ics1364032122001952.html
   My bibliography  Save this article

The coordination of pumped hydro storage, electric vehicles, and climate policy in imperfect electricity markets: Insights from China

Author

Listed:
  • Wesseh, Presley K.
  • Benjamin, Nelson I.
  • Lin, Boqiang

Abstract

An understanding of how storage technologies coordinate with other power resources to deliver value for electricity market participants in compliance with climate policy will be vital as policy makers seek to decarbonize electricity generation in a cost-effective way. This paper adopts a game-theoretic electricity market model to evaluate the interaction between pumped hydro storage, electric vehicles, and climate policy under a range of assumptions regarding market power and ownership of generation and storage assets. Using data from the Chinese electricity market, it shows that climate policy may not incentivize storage utilization especially when firms that hold a dominant position in storage operation own a limited portfolio of generation assets. In addition, electric vehicles may not improve consumers’ welfare in the presence of pumped hydro storage when perfect competition exists in the market. These results have significant implications for public policy.

Suggested Citation

  • Wesseh, Presley K. & Benjamin, Nelson I. & Lin, Boqiang, 2022. "The coordination of pumped hydro storage, electric vehicles, and climate policy in imperfect electricity markets: Insights from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:rensus:v:160:y:2022:i:c:s1364032122001952
    DOI: 10.1016/j.rser.2022.112275
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032122001952
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2022.112275?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 search for a different version of it.

    References listed on IDEAS

    as
    1. Huntington, Hillard G. & Barrios, James J. & Arora, Vipin, 2019. "Review of key international demand elasticities for major industrializing economies," Energy Policy, Elsevier, vol. 133(C).
    2. Sheldon, Tamara L. & Dua, Rubal, 2020. "Effectiveness of China's plug-in electric vehicle subsidy," Energy Economics, Elsevier, vol. 88(C).
    3. Steffen, Bjarne & Weber, Christoph, 2016. "Optimal operation of pumped-hydro storage plants with continuous time-varying power prices," European Journal of Operational Research, Elsevier, vol. 252(1), pages 308-321.
    4. Andersson, S.-L. & Elofsson, A.K. & Galus, M.D. & Göransson, L. & Karlsson, S. & Johnsson, F. & Andersson, G., 2010. "Plug-in hybrid electric vehicles as regulating power providers: Case studies of Sweden and Germany," Energy Policy, Elsevier, vol. 38(6), pages 2751-2762, June.
    5. Javed, Muhammad Shahzad & Zhong, Dan & Ma, Tao & Song, Aotian & Ahmed, Salman, 2020. "Hybrid pumped hydro and battery storage for renewable energy based power supply system," Applied Energy, Elsevier, vol. 257(C).
    6. Lihui Zhang & He Xin & Jing Wu & Liwei Ju & Zhongfu Tan, 2017. "A Multiobjective Robust Scheduling Optimization Mode for Multienergy Hybrid System Integrated by Wind Power, Solar Photovoltaic Power, and Pumped Storage Power," Mathematical Problems in Engineering, Hindawi, vol. 2017, pages 1-15, August.
    7. Wesseh, Presley K. & Lin, Boqiang, 2018. "Optimal carbon taxes for China and implications for power generation, welfare, and the environment," Energy Policy, Elsevier, vol. 118(C), pages 1-8.
    8. Paul L. Joskow, 2008. "Lessons Learned from Electricity Market Liberalization," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 9-42.
    9. Wesseh, Presley K. & Lin, Boqiang, 2021. "Bulk storage technologies in imperfect electricity markets under time-of-use pricing: Implications for the environment and social welfare," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    10. Javed, Muhammad Shahzad & Ma, Tao & Jurasz, Jakub & Amin, Muhammad Yasir, 2020. "Solar and wind power generation systems with pumped hydro storage: Review and future perspectives," Renewable Energy, Elsevier, vol. 148(C), pages 176-192.
    11. Häckner, Jonas & Herzing, Mathias, 2017. "The effectiveness of environmental inspections in oligopolistic markets," Resource and Energy Economics, Elsevier, vol. 48(C), pages 83-97.
    12. Tang, Renbo & Yang, Jiandong & Yang, Weijia & Zou, Jin & Lai, Xu, 2019. "Dynamic regulation characteristics of pumped-storage plants with two generating units sharing common conduits and busbar for balancing variable renewable energy," Renewable Energy, Elsevier, vol. 135(C), pages 1064-1077.
    13. Wolf-Peter, Schill, 2011. "Electric vehicles in imperfect electricity markets: The case of Germany," Energy Policy, Elsevier, vol. 39(10), pages 6178-6189, October.
    14. Konishi, Yoshifumi & Managi, Shunsuke, 2020. "Do regulatory loopholes distort technical change? Evidence from new vehicle launches under the Japanese fuel economy regulation," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    15. Zhang, Ning & Hu, Zhaoguang & Shen, Bo & He, Gang & Zheng, Yanan, 2017. "An integrated source-grid-load planning model at the macro level: Case study for China's power sector," Energy, Elsevier, vol. 126(C), pages 231-246.
    16. Jinjin Gao & Yuan Zheng & Jianming Li & Xiaoming Zhu & Kan Kan, 2018. "Optimal Model for Complementary Operation of a Photovoltaic-Wind-Pumped Storage System," Mathematical Problems in Engineering, Hindawi, vol. 2018, pages 1-9, December.
    17. Crampes, Claude & Moreaux, Michel, 2010. "Pumped storage and cost saving," Energy Economics, Elsevier, vol. 32(2), pages 325-333, March.
    18. Ming, Zeng & Kun, Zhang & Daoxin, Liu, 2013. "Overall review of pumped-hydro energy storage in China: Status quo, operation mechanism and policy barriers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 17(C), pages 35-43.
    19. Barbour, Edward & Wilson, I.A. Grant & Radcliffe, Jonathan & Ding, Yulong & Li, Yongliang, 2016. "A review of pumped hydro energy storage development in significant international electricity markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 421-432.
    20. Wesseh, Presley K. & Lin, Boqiang, 2018. "Exchange rate fluctuations, oil price shocks and economic growth in a small net-importing economy," Energy, Elsevier, vol. 151(C), pages 402-407.
    21. Gbatu, Abimelech Paye & Wang, Zhen & Wesseh, Presley K. & Tutdel, Isaac Yak Repha, 2017. "The impacts of oil price shocks on small oil-importing economies: Time series evidence for Liberia," Energy, Elsevier, vol. 139(C), pages 975-990.
    22. Ekholm, Tommi & Soimakallio, Sampo & Moltmann, Sara & Höhne, Niklas & Syri, Sanna & Savolainen, Ilkka, 2010. "Effort sharing in ambitious, global climate change mitigation scenarios," Energy Policy, Elsevier, vol. 38(4), pages 1797-1810, April.
    23. Lin, Boqiang & Wesseh, Presley K., 2020. "On the economics of carbon pricing: Insights from econometric modeling with industry-level data," Energy Economics, Elsevier, vol. 86(C).
    24. Ventosa, Mariano & Baillo, Alvaro & Ramos, Andres & Rivier, Michel, 2005. "Electricity market modeling trends," Energy Policy, Elsevier, vol. 33(7), pages 897-913, May.
    25. Xu, Lei & Chen, Nengcheng & Chen, Zeqiang, 2017. "Will China make a difference in its carbon intensity reduction targets by 2020 and 2030?," Applied Energy, Elsevier, vol. 203(C), pages 874-882.
    26. Sun, Kaiqi & Li, Ke-Jun & Pan, Jiuping & Liu, Yong & Liu, Yilu, 2019. "An optimal combined operation scheme for pumped storage and hybrid wind-photovoltaic complementary power generation system," Applied Energy, Elsevier, vol. 242(C), pages 1155-1163.
    27. Wolf-Peter Schill & Claudia Kemfert, 2011. "Modeling Strategic Electricity Storage: The Case of Pumped Hydro Storage in Germany," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 59-88.
    28. Wolf-Peter, Schill, 2011. "Electric vehicles in imperfect electricity markets: The case of Germany," Energy Policy, Elsevier, vol. 39(10), pages 6178-6189, October.
    29. Weiwei Yao & Changhong Deng & Dinglin Li & Man Chen & Peng Peng & Hao Zhang, 2019. "Optimal Sizing of Seawater Pumped Storage Plant with Variable-Speed Units Considering Offshore Wind Power Accommodation," Sustainability, MDPI, vol. 11(7), pages 1-18, April.
    30. Li, Yun & Li, Yanbin & Ji, Pengfei & Yang, Jing, 2015. "Development of energy storage industry in China: A technical and economic point of review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 805-812.
    31. Liu, Hailiang & Brown, Tom & Andresen, Gorm Bruun & Schlachtberger, David P. & Greiner, Martin, 2019. "The role of hydro power, storage and transmission in the decarbonization of the Chinese power system," Applied Energy, Elsevier, vol. 239(C), pages 1308-1321.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pampa Sinha & Kaushik Paul & Sanchari Deb & Sulabh Sachan, 2023. "Comprehensive Review Based on the Impact of Integrating Electric Vehicle and Renewable Energy Sources to the Grid," Energies, MDPI, vol. 16(6), pages 1-39, March.
    2. Xu, Xin & Huang, Shupei & Lucey, Brian M. & An, Haizhong, 2023. "The impacts of climate policy uncertainty on stock markets: Comparison between China and the US," International Review of Financial Analysis, Elsevier, vol. 88(C).
    3. Papadakis C. Nikolaos & Fafalakis Marios & Katsaprakakis Dimitris, 2023. "A Review of Pumped Hydro Storage Systems," Energies, MDPI, vol. 16(11), pages 1-39, June.
    4. Lin, Boqiang & Chen, Jiaying & Wesseh, Presley K., 2022. "Peak-valley tariffs and solar prosumers: Why renewable energy policies should target local electricity markets," Energy Policy, Elsevier, vol. 165(C).
    5. Zhou, Xingyu & Sun, Chao & Sun, Fengchun & Zhang, Chuntao, 2023. "Commuting-pattern-oriented stochastic optimization of electric powertrains for revealing contributions of topology modifications to the powertrain energy efficiency," Applied Energy, Elsevier, vol. 344(C).
    6. Mahfoud, Rabea Jamil & Alkayem, Nizar Faisal & Zhang, Yuquan & Zheng, Yuan & Sun, Yonghui & Alhelou, Hassan Haes, 2023. "Optimal operation of pumped hydro storage-based energy systems: A compendium of current challenges and future perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 178(C).
    7. Tan, Xiaoqiang & Li, Chaoshun & Liu, Dong & Wang, He & Xu, Rongli & Lu, Xueding & Zhu, Zhiwei, 2023. "Multi-time scale model reduction strategy of variable-speed pumped storage unit grid-connected system for small-signal oscillation stability analysis," Renewable Energy, Elsevier, vol. 211(C), pages 985-1009.

    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. Wesseh, Presley K. & Lin, Boqiang, 2021. "Bulk storage technologies in imperfect electricity markets under time-of-use pricing: Implications for the environment and social welfare," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    2. Mahfoud, Rabea Jamil & Alkayem, Nizar Faisal & Zhang, Yuquan & Zheng, Yuan & Sun, Yonghui & Alhelou, Hassan Haes, 2023. "Optimal operation of pumped hydro storage-based energy systems: A compendium of current challenges and future perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 178(C).
    3. Javed, Muhammad Shahzad & Ma, Tao & Jurasz, Jakub & Amin, Muhammad Yasir, 2020. "Solar and wind power generation systems with pumped hydro storage: Review and future perspectives," Renewable Energy, Elsevier, vol. 148(C), pages 176-192.
    4. Chaoyang Chen & Hualing Liu & Yong Xiao & Fagen Zhu & Li Ding & Fuwen Yang, 2022. "Power Generation Scheduling for a Hydro-Wind-Solar Hybrid System: A Systematic Survey and Prospect," Energies, MDPI, vol. 15(22), pages 1-31, November.
    5. Mensah, Johnson Herlich Roslee & Santos, Ivan Felipe Silva dos & Raimundo, Danielle Rodrigues & Costa de Oliveira Botan, Maria Cláudia & Barros, Regina Mambeli & Tiago Filho, Geraldo Lucio, 2022. "Energy and economic study of using Pumped Hydropower Storage with renewable resources to recover the Furnas reservoir," Renewable Energy, Elsevier, vol. 199(C), pages 320-334.
    6. Schill, Wolf-Peter & Gerbaulet, Clemens, 2015. "Power System Impacts of Electric Vehicles in Germany: Charging with Coal or Renewables," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 156, pages 185-196.
    7. Schroeder, Andreas & Traber, Thure, 2012. "The economics of fast charging infrastructure for electric vehicles," Energy Policy, Elsevier, vol. 43(C), pages 136-144.
    8. Loisel, Rodica & Pasaoglu, Guzay & Thiel, Christian, 2014. "Large-scale deployment of electric vehicles in Germany by 2030: An analysis of grid-to-vehicle and vehicle-to-grid concepts," Energy Policy, Elsevier, vol. 65(C), pages 432-443.
    9. Chin Hui Hao & Presley K. Wesseh & David Iheke Okorie & Hermas Abudu, 2023. "Implications of Growing Wind and Solar Penetration in Retail Electricity Markets with Gradual Demand Response," Energies, MDPI, vol. 16(23), pages 1-15, December.
    10. Thomaßen, Georg & Redl, Christian & Bruckner, Thomas, 2022. "Will the energy-only market collapse? On market dynamics in low-carbon electricity systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 164(C).
    11. Lin, Boqiang & Chen, Jiaying & Wesseh, Presley K., 2022. "Peak-valley tariffs and solar prosumers: Why renewable energy policies should target local electricity markets," Energy Policy, Elsevier, vol. 165(C).
    12. Will, Christian & Zimmermann, Florian & Ensslen, Axel & Fraunholz, Christoph & Jochem, Patrick & Keles, Dogan, 2023. "Can electric vehicle charging be carbon neutral? Uniting smart charging and renewables," Working Paper Series in Production and Energy 69, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    13. Hoffstaedt, J.P. & Truijen, D.P.K. & Fahlbeck, J. & Gans, L.H.A. & Qudaih, M. & Laguna, A.J. & De Kooning, J.D.M. & Stockman, K. & Nilsson, H. & Storli, P.-T. & Engel, B. & Marence, M. & Bricker, J.D., 2022. "Low-head pumped hydro storage: A review of applicable technologies for design, grid integration, control and modelling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    14. Reinhard Haas & Claudia Kemfert & Hans Auer & Amela Ajanovic & Marlene Sayer & Albert Hiesl, 2022. "On the economics of storage for electricity: Current state and future market design prospects," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(3), May.
    15. Andrade Furtado, Gilton Carlos de & Amarante Mesquita, André Luiz & Morabito, Alessandro & Hendrick, Patrick & Hunt, Julian D., 2020. "Using hydropower waterway locks for energy storage and renewable energies integration," Applied Energy, Elsevier, vol. 275(C).
    16. Helm, Carsten & Mier, Mathias, 2021. "Steering the energy transition in a world of intermittent electricity supply: Optimal subsidies and taxes for renewables and storage," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    17. Martínez-Lao, Juan & Montoya, Francisco G. & Montoya, Maria G. & Manzano-Agugliaro, Francisco, 2017. "Electric vehicles in Spain: An overview of charging systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 970-983.
    18. Dzikri Firmansyah Hakam, 2018. "Market Power Modelling in Electricity Market: A Critical Review," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 347-356.
    19. Vasileios Kitsikoudis & Pierre Archambeau & Benjamin Dewals & Estanislao Pujades & Philippe Orban & Alain Dassargues & Michel Pirotton & Sebastien Erpicum, 2020. "Underground Pumped-Storage Hydropower (UPSH) at the Martelange Mine (Belgium): Underground Reservoir Hydraulics," Energies, MDPI, vol. 13(14), pages 1-16, July.
    20. Hou, Hui & Xu, Tao & Wu, Xixiu & Wang, Huan & Tang, Aihong & Chen, Yangyang, 2020. "Optimal capacity configuration of the wind-photovoltaic-storage hybrid power system based on gravity energy storage system," Applied Energy, Elsevier, vol. 271(C).

    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:rensus:v:160:y:2022:i:c:s1364032122001952. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    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.