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Competitive Energy Storage and the Duck Curve

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  • 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
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    References listed on IDEAS

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    1. repec:aen:journl:ej41-2-green is not listed on IDEAS
    2. Gerard Llobet & Jorge Padilla, 2018. "Conventional Power Plants in Liberalized Electricity Marketswith Renewable Entry," The Energy Journal, , vol. 39(3), pages 69-92, May.
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    4. Joskow, Paul L., 2008. "Capacity payments in imperfect electricity markets: Need and design," Utilities Policy, Elsevier, vol. 16(3), pages 159-170, September.
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    Cited by:

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    2. Khyati Malik, 2026. "Farmer Adoption and Payment Design Under Risk: Variability in Soil Carbon Sequestration Across Conservation Practices," NBER Chapters, in: Risk and Risk Management in the Agricultural Economy, National Bureau of Economic Research, Inc.
    3. Sparks, Ryan & Tobias, Santos & Kemabonta, Tam & Nelson, James & Johnson, Nathan, 2025. "Microgrid system sizing and aggregation of distributed energy resources for wholesale market participation," Applied Energy, Elsevier, vol. 400(C).
    4. Balakin, Sergei & Roger, Guillaume, 2025. "Dynamic trading strategies for storage," Journal of Economic Dynamics and Control, Elsevier, vol. 176(C).
    5. Oliver, Matthew E. & Chapman, Oliver & Grijalva, Santiago & Matisoff, Daniel C. & Ramadhani, Maghfira & West, Amanda, 2026. "Managing zero-marginal-cost, intermittent renewable energy: A survey of the engineering, economic, and policy challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 226(PC).
    6. Milstein, I. & Tishler, A. & Woo, C.K., 2025. "Modeling the effects of photovoltaic technology, battery storage, and electric vehicles on Israel's electricity market from 2030 to 2050," Utilities Policy, Elsevier, vol. 95(C).
    7. Gökgöz, Fazıl & Yücel, Öykü, 2025. "Measuring the long-term impact of wind, run-of-river, solar renewable energy alternatives on market clearing prices," Renewable Energy, Elsevier, vol. 241(C).
    8. 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).
    9. Zhang, Tuo & Tang, Maogang, 2024. "Solar surge and cost shifts: Heterogenous effects of redistribution in the electricity bills in Japan," Energy Economics, Elsevier, vol. 137(C).
    10. Mays, Jacob, 2024. "Sequential pricing of electricity," Energy Economics, Elsevier, vol. 137(C).

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