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Electric Vehicles in Imperfect Electricity Markets: A German Case Study

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  • Wolf-Peter Schill

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.

Suggested Citation

  • Wolf-Peter Schill, 2010. "Electric Vehicles in Imperfect Electricity Markets: A German Case Study," Discussion Papers of DIW Berlin 1084, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1084
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    Citations

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    Cited by:

    1. Schroeder, Andreas & Traber, Thure, 2012. "The economics of fast charging infrastructure for electric vehicles," Energy Policy, Elsevier, vol. 43(C), pages 136-144.
    2. Schill, Wolf-Peter & Gerbaulet, Clemens, 2015. "Power System Impacts of Electric Vehicles in Germany: Charging with Coal or Renewables," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 185-196.
    3. 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.
    4. repec:clr:wugarc:y:2012:v:38i:1p:103 is not listed on IDEAS
    5. Thomas Döring & Birgit Aigner-Walder, 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.
    6. Zulkarnain & Pekka Leviäkangas & Tuomo Kinnunen & Pekka Kess, 2014. "The Electric Vehicles Ecosystem Model: Construct, Analysis and Identification of Key Challenges," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 12(3 (Fall)), pages 253-277.
    7. repec:eee:rensus:v:77:y:2017:i:c:p:970-983 is not listed on IDEAS
    8. repec:eee:appene:v:203:y:2017:i:c:p:608-622 is not listed on IDEAS
    9. Hota, Ashish Ranjan & Juvvanapudi, Mahesh & Bajpai, Prabodh, 2014. "Issues and solution approaches in PHEV integration to smart grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 217-229.

    More about this item

    Keywords

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

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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