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Market equilibria and interactions between strategic generation, wind, and storage

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  • Shahmohammadi, Ali
  • Sioshansi, Ramteen
  • Conejo, Antonio J.
  • Afsharnia, Saeed

Abstract

Rising wind penetrations can suppress wholesale energy prices by displacing higher-cost conventional generation from the merit order. Wind suffers disproportionately from this price suppression, because the price is most suppressed when wind availability is high, hindering wind-investment incentives. One way to mitigate this price suppression is by wind exercising market power, which introduces efficiency losses. An alternative is to use energy storage, which allows energy to be stored when wind availability is high. This stored energy is later discharged when wind availability is lower and prices are higher.

Suggested Citation

  • Shahmohammadi, Ali & Sioshansi, Ramteen & Conejo, Antonio J. & Afsharnia, Saeed, 2018. "Market equilibria and interactions between strategic generation, wind, and storage," Applied Energy, Elsevier, vol. 220(C), pages 876-892.
    • Handle: RePEc:eee:appene:v:220:y:2018:i:c:p:876-892
    DOI: 10.1016/j.apenergy.2017.10.035
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    9. Sun, Xiaocong & Bao, Minglei & Guo, Chao & Ding, Yi & Zheng, Chenghang & Gao, Xiang, 2024. "An equilibrium capacity expansion model for power systems considering Gencos' coupled decisions between carbon and electricity markets," Applied Energy, Elsevier, vol. 359(C).
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