IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v43y2022i2p1-16.html
   My bibliography  Save this article

Competitive Energy Storage and the Duck Curve

Author

Listed:
  • Richard Schmalensee

Abstract

Power systems with high penetrations of solar generation need to replace solar output when it falls rapidly in the late afternoon—the duck curve problem. Storage is a carbon-free solution to this problem. This essay considers investment in generation and storage to minimize expected cost in a Boiteux-Turvey-style model of an electric power system with alternating daytime time periods, with solar generation, and nighttime periods, without it. In the most interesting cases, if energy market prices are uncapped, all expected cost minima are long-run competitive equilibria, and the long-run equilibrium value of storage capacity minimizes expected system cost conditional on generation capacities.

Suggested Citation

  • Richard Schmalensee, 2022. "Competitive Energy Storage and the Duck Curve," The Energy Journal, , vol. 43(2), pages 1-16, March.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:2:p:1-16
    DOI: 10.5547/01956574.43.2.rsch
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.43.2.rsch
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.43.2.rsch?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joachim Geske & Richard Green, 2020. "Optimal Storage, Investment and Management under Uncertainty: It is Costly to Avoid Outages!," The Energy Journal, , vol. 41(2), pages 1-28, March.
    2. Gerard Llobet and Jorge Padilla, 2018. "Conventional Power Plants in Liberalized Electricity Markets with Renewable Entry," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    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. Chaves, J. P. & Cossent, R. & Gómez San Román, T. & Linares, P. & Rivier, M., 2023. "An assessment of the European electricity market reform options and a pragmatic proposal," Cambridge Working Papers in Economics 2325, Faculty of Economics, University of Cambridge.
    2. Moshe Kelner & Zinoviy Landsman & Udi E. Makov, 2022. "Probabilistic Peak Demand Estimation Using Members of the Clayton Generalized Gamma Copula Family," Energies, MDPI, vol. 15(16), pages 1-15, August.
    3. Isogai, Hirotaka & Nakagaki, Takao, 2024. "Power-to-heat amine-based post-combustion CO2 capture system with solvent storage utilizing fluctuating electricity prices," Applied Energy, Elsevier, vol. 368(C).
    4. J.P. Chaves & R. Cossent & T. Gómez San Román & P. Linares & M. Rivier, 2023. "An assessment of the European electricity market reform options and a pragmatic proposal," Working Papers EPRG2305, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Yukta Mehta & Rui Xu & Benjamin Lim & Jane Wu & Jerry Gao, 2023. "A Review for Green Energy Machine Learning and AI Services," Energies, MDPI, vol. 16(15), pages 1-30, July.
    6. Alberto J. Lamadrid & Hao Lu & Timothy D. Mount, 2024. "A simple way to integrate distributed storage into a wholesale electricity market," Journal of Regulatory Economics, Springer, vol. 65(1), pages 27-63, June.

    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. 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).
    2. Llobet, Gerard & Fabra, Natalia, 2019. "Auctions with Unknown Capacities: Understanding Competition among Renewables," CEPR Discussion Papers 14060, C.E.P.R. Discussion Papers.
    3. Holmberg, P. & Ritz, R., 2019. "Capacity mechanisms and the technology mix in competitive electricity markets," Cambridge Working Papers in Economics 1960, Faculty of Economics, University of Cambridge.
    4. Böhringer, Christoph & Rosendahl, Knut Einar, 2022. "Europe beyond coal – An economic and climate impact assessment," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    5. Albert Hiesl & Amela Ajanovic & Reinhard Haas, 2020. "On current and future economics of electricity storage," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 10(6), pages 1176-1192, December.
    6. Bialek, Sylwia & Ünel, Burçin, 2022. "Efficiency in wholesale electricity markets: On the role of externalities and subsidies," Energy Economics, Elsevier, vol. 109(C).
    7. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    8. Fabra, Natalia, 2021. "The energy transition: An industrial economics perspective," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    9. Irena Milstein & Asher Tishler & Chi-Keung Woo, 2024. "Carbon-free Electricity Supply in a Cournot Wholesale Market: Israel," The Energy Journal, , vol. 45(2), pages 1-21, March.
    10. Su, Q. & Zhou, P. & Ding, H. & Xydis, G., 2024. "Transition towards a hybrid energy system: Combined effects of renewable portfolio standards and carbon emission trading," Energy Economics, Elsevier, vol. 135(C).
    11. Topalović, Zejneba & Haas, Reinhard & Ajanović, Amela & Hiesl, Albert, 2022. "Economics of electric energy storage. The case of Western Balkans," Energy, Elsevier, vol. 238(PA).
    12. Pär Holmberg & Robert A. Ritz, 2021. "Optimal Capacity Mechanisms for Competitive Electricity Markets," The Energy Journal, , vol. 42(1_suppl), pages 1-34, June.
    13. Peña, Juan Ignacio & Rodríguez, Rosa & Mayoral, Silvia, 2022. "Cannibalization, depredation, and market remuneration of power plants," Energy Policy, Elsevier, vol. 167(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. Newbery, David, 2021. "National Energy and Climate Plans for the island of Ireland: wind curtailment, interconnectors and storage," Energy Policy, Elsevier, vol. 158(C).
    16. Fabra, Natalia, 2018. "A primer on capacity mechanisms," Energy Economics, Elsevier, vol. 75(C), pages 323-335.
    17. Holmberg, P. & Tangerås, T., 2021. "Strategic Reserves versus Market-wide Capacity Mechanisms," Cambridge Working Papers in Economics 2132, Faculty of Economics, University of Cambridge.
    18. Cristian Junge & Dharik Mallapragada & Richard Schmalensee, 2022. "Energy Storage Investment and Operation in Efficient Electric Power Systems," The Energy Journal, , vol. 43(6), pages 1-24, November.
    19. Best, Rohan & Li, Han & Trück, Stefan & Truong, Chi, 2021. "Actual uptake of home batteries: The key roles of capital and policy," Energy Policy, Elsevier, vol. 151(C).
    20. George E. Halkos & Apostolos S. Tsirivis, 2023. "Sustainable Development of the European Electricity Sector: Investigating the Impact of Electricity Price, Market Liberalization and Energy Taxation on RES Deployment," Energies, MDPI, vol. 16(14), pages 1-21, July.

    More about this item

    Keywords

    Electricity; Storage; Solar; Arbitrage; Renewable; Duck curve; Competition;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

    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:sae:enejou:v:43:y:2022:i:2:p:1-16. 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: SAGE Publications (email available below). General contact details of provider: .

    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.