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Efficient storage capacity in power systems with thermal and renewable generation

  • Bjarne Steffen

    ()

  • Christoph Weber

    ()

    (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)

Power systems with high shares of wind and solar power have to balance their intermittent nature. Pumpedâ€hydro storage plants can provide the required flexibility, while thermal backup plants offer an alternative. This paper proposes a model based on peakâ€loadâ€pricing theory to describe the efficient technology portfolio. Drawing on a load duration curve, we derive the efficient storage capacity and discuss its dependence on cost parameters. It is shown that renewable generation affects the efficient storage capacity by changing the shape of the residual load duration curve, while limited time periods with renewable generation in excess of load do not necessarily affect the level of storage. A case study for Germany applies the model and highlights the impact of CO2 prices on storage efficiency.

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File URL: http://www.sciencedirect.com/science/article/pii/S0140988312002812
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Paper provided by University of Duisburg-Essen, Chair for Management Science and Energy Economics in its series EWL Working Papers with number 1104.

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Length: 21 pages
Date of creation: Aug 2011
Date of revision: Aug 2011
Handle: RePEc:dui:wpaper:1104
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Web page: http://www.ewl.wiwi.uni-due.de

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  1. Gravelle, H S E, 1976. "The Peak Load Problem with Feasible Storage," Economic Journal, Royal Economic Society, vol. 86(342), pages 256-77, June.
  2. Horsley, Anthony & Wrobel, Andrew J., 2002. "Efficiency rents of pumped-storage plants and their uses for operation and investment decisions," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 109-142, November.
  3. Crew, Michael A & Fernando, Chitru S & Kleindorfer, Paul R, 1995. "The Theory of Peak-Load Pricing: A Survey," Journal of Regulatory Economics, Springer, vol. 8(3), pages 215-48, November.
  4. Malte Sunderkoetter & Christoph Weber, 2009. "Valuing fuel diversification in optimal investment policies for electricity generation portfolios," EWL Working Papers 0904, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Nov 2009.
  5. Petter Bjerksund & Gunnar Stensland & Frank Vagstad, 2011. "Gas Storage Valuation: Price Modelling v. Optimization Methods," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 203-228.
  6. Nyamdash, Batsaikhan & Denny, Eleanor & O'Malley, Mark, 2010. "The viability of balancing wind generation with large scale energy storage," Energy Policy, Elsevier, vol. 38(11), pages 7200-7208, November.
  7. Crampes, Claude & Moreaux, Michel, 2010. "Pumped storage and cost saving," Energy Economics, Elsevier, vol. 32(2), pages 325-333, March.
  8. Sioshansi, Ramteen & Denholm, Paul & Jenkin, Thomas, 2011. "A comparative analysis of the value of pure and hybrid electricity storage," Energy Economics, Elsevier, vol. 33(1), pages 56-66, January.
  9. Sioshansi, Ramteen & Denholm, Paul & Jenkin, Thomas & Weiss, Jurgen, 2009. "Estimating the value of electricity storage in PJM: Arbitrage and some welfare effects," Energy Economics, Elsevier, vol. 31(2), pages 269-277, March.
  10. Ramteen Sioshansi, 2010. "Welfare Impacts of Electricity Storage and the Implications of Ownership Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 173-198.
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