Long-term equilibrium in electricity markets with renewables and energy storage only
In this paper, we study the optimal generation mix in power systems where only two technologies are available: variable renewable energy (VRE) and electric energy storage (EES). By using a net load duration curve approach, we formulate a least-cost optimization model in which EES is only limited by...
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| Format: | Article |
| Language: | English |
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Springer Science and Business Media LLC
2024
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| Online Access: | https://hdl.handle.net/1721.1/154089 |
| _version_ | 1824458159753789440 |
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| author | Tarel, Guillaume Korpås, Magnus Botterud, Audun |
| author2 | Massachusetts Institute of Technology. Laboratory for Information and Decision Systems |
| author_facet | Massachusetts Institute of Technology. Laboratory for Information and Decision Systems Tarel, Guillaume Korpås, Magnus Botterud, Audun |
| author_sort | Tarel, Guillaume |
| collection | MIT |
| description | In this paper, we study the optimal generation mix in power systems where only two technologies are available: variable renewable energy (VRE) and electric energy storage (EES). By using a net load duration curve approach, we formulate a least-cost optimization model in which EES is only limited by its power capacity. We solve this problem analytically and find least-cost and market equilibrium conditions that lead to the optimal capacities of VRE and EES. We show that, mathematically, an electricity price structure that depends on the period of the year (i.e. EES charging or discharging, VRE curtailment, load shedding) and on investments costs leads to cost recovery for VRE and EES. We show that when EES is the marginal technology (either charging or discharging) the price must be non-zero. More specifically, the equilibrium prices during EES charge or discharge are functions of the EES and VRE fixed costs. We confirm our analytical findings using a numerical model. We argue that, although the system we study is hypothetical and simplified, our findings provide insights and research directions for how to recover fixed costs in a future electricity market based on VRE and EES only. |
| first_indexed | 2024-09-23T12:31:38Z |
| format | Article |
| id | mit-1721.1/154089 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2025-02-19T04:21:28Z |
| publishDate | 2024 |
| publisher | Springer Science and Business Media LLC |
| record_format | dspace |
| spelling | mit-1721.1/1540892025-01-04T05:17:09Z Long-term equilibrium in electricity markets with renewables and energy storage only Tarel, Guillaume Korpås, Magnus Botterud, Audun Massachusetts Institute of Technology. Laboratory for Information and Decision Systems General Energy Economics and Econometrics Modeling and Simulation In this paper, we study the optimal generation mix in power systems where only two technologies are available: variable renewable energy (VRE) and electric energy storage (EES). By using a net load duration curve approach, we formulate a least-cost optimization model in which EES is only limited by its power capacity. We solve this problem analytically and find least-cost and market equilibrium conditions that lead to the optimal capacities of VRE and EES. We show that, mathematically, an electricity price structure that depends on the period of the year (i.e. EES charging or discharging, VRE curtailment, load shedding) and on investments costs leads to cost recovery for VRE and EES. We show that when EES is the marginal technology (either charging or discharging) the price must be non-zero. More specifically, the equilibrium prices during EES charge or discharge are functions of the EES and VRE fixed costs. We confirm our analytical findings using a numerical model. We argue that, although the system we study is hypothetical and simplified, our findings provide insights and research directions for how to recover fixed costs in a future electricity market based on VRE and EES only. 2024-04-08T14:25:16Z 2024-04-08T14:25:16Z 2024-04-02 2024-04-07T03:11:29Z Article http://purl.org/eprint/type/JournalArticle 1868-3967 1868-3975 https://hdl.handle.net/1721.1/154089 Tarel, G., Korpås, M. & Botterud, A. Long-term equilibrium in electricity markets with renewables and energy storage only. Energy Syst (2024). PUBLISHER_CC en 10.1007/s12667-024-00654-y Energy Systems Creative Commons Attribution https://creativecommons.org/licenses/by/4.0/ The Author(s) application/pdf Springer Science and Business Media LLC Springer Berlin Heidelberg |
| spellingShingle | General Energy Economics and Econometrics Modeling and Simulation Tarel, Guillaume Korpås, Magnus Botterud, Audun Long-term equilibrium in electricity markets with renewables and energy storage only |
| title | Long-term equilibrium in electricity markets with renewables and energy storage only |
| title_full | Long-term equilibrium in electricity markets with renewables and energy storage only |
| title_fullStr | Long-term equilibrium in electricity markets with renewables and energy storage only |
| title_full_unstemmed | Long-term equilibrium in electricity markets with renewables and energy storage only |
| title_short | Long-term equilibrium in electricity markets with renewables and energy storage only |
| title_sort | long term equilibrium in electricity markets with renewables and energy storage only |
| topic | General Energy Economics and Econometrics Modeling and Simulation |
| url | https://hdl.handle.net/1721.1/154089 |
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