IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v107y2022ics0140988321006174.html
   My bibliography  Save this article

The limits in the adoption of batteries

Author

Listed:
  • Moita, Rodrigo
  • Monte, Daniel

Abstract

We develop a model of electricity markets with intermittent renewable generators, thermal plants and battery owners. Our model incorporates the case of distributed generation, or prosumers, which are agents that both consume and produce power with photovoltaic systems (PV), which have low marginal cost, but rely on stochastic and non-marketable inputs. Batteries have an important role in this world, since they increase the supply reliability of a system with a large share of intermittent generators. Batteries smooth prices across periods, but have decreasing marginal benefit due to this effect on prices. Consequently, the predicted adoption rate of batteries is limited, even as battery prices decrease. We then calibrate our model with data from Uruguay, and show that the marginal profits from batteries go to zero after battery capacity crosses a threshold, and its adoption rate never reaches 100% of the renewables’ capacity.

Suggested Citation

  • Moita, Rodrigo & Monte, Daniel, 2022. "The limits in the adoption of batteries," Energy Economics, Elsevier, vol. 107(C).
    • Handle: RePEc:eee:eneeco:v:107:y:2022:i:c:s0140988321006174
    DOI: 10.1016/j.eneco.2021.105776
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988321006174
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2021.105776?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Axel Gautier & Julien Jacqmin & Jean-Christophe Poudou, 2018. "The prosumers and the grid," Journal of Regulatory Economics, Springer, vol. 53(1), pages 100-126, February.
    2. David Atkin & Azam Chaudhry & Shamyla Chaudry & Amit K. Khandelwal & Eric Verhoogen, 2017. "Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1101-1164.
    3. Jean-Christophe Poudou & Axel Gautier & Julien Jacqmin, 2018. "The prosumers and the grid," Post-Print hal-01810028, HAL.
    4. Rodolfo E. Manuelli & Ananth Seshadri, 2014. "Frictionless Technology Diffusion: The Case of Tractors," American Economic Review, American Economic Association, vol. 104(4), pages 1368-1391, April.
    5. Hitaj, Claudia, 2013. "Wind power development in the United States," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 394-410.
    6. Jeremy Greenwood & Ananth Seshadri & Mehmet Yorukoglu, 2005. "Engines of Liberation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 109-133.
    7. Monica Giulietti, Luigi Grossi, Elisa Trujillo Baute, and Michael Waterson, 2018. "Analyzing the Potential Economic Value of Energy Storage," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    8. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-841, August.
    9. Musiliu O. Oseni, 2017. "Self-Generation and Households' Willingness to Pay for Reliable Electricity Service in Nigeria," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    10. Garcia, Alfredo & Reitzes, James D & Stacchetti, Ennio, 2001. "Strategic Pricing when Electricity is Storable," Journal of Regulatory Economics, Springer, vol. 20(3), pages 223-247, November.
    11. Wolak, Frank A., 2015. "Measuring the competitiveness benefits of a transmission investment policy: The case of the Alberta electricity market," Energy Policy, Elsevier, vol. 85(C), pages 426-444.
    12. Carson, Richard T. & Novan, Kevin, 2013. "The private and social economics of bulk electricity storage," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 404-423.
    13. Crampes, C. & Moreaux, M., 2001. "Water resource and power generation," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 975-997, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carsten Helm & Mathias Mier, 2020. "Steering the Energy Transition in a World of Intermittent Electricity Supply: Optimal Subsidies and Taxes for Renewables Storage," ifo Working Paper Series 330, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Helm, Carsten & Mier, Mathias, 2021. "Steering the energy transition in a world of intermittent electricity supply: Optimal subsidies and taxes for renewables and storage," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    3. Ahmed S. Alahmed & Lang Tong, 2022. "Integrating Distributed Energy Resources: Optimal Prosumer Decisions and Impacts of Net Metering Tariffs," Papers 2204.06115, arXiv.org, revised May 2022.
    4. Hashemi, Majid & Jenkins, Glenn & Milne, Frank, 2023. "Rooftop solar with net metering: An integrated investment appraisal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 188(C).
    5. Robles, Jack, 2016. "Infinite horizon hydroelectricity games," Working Paper Series 5075, Victoria University of Wellington, School of Economics and Finance.
    6. van Ackere, Ann & Ochoa, Patricia, 2010. "Managing a hydro-energy reservoir: A policy approach," Energy Policy, Elsevier, vol. 38(11), pages 7299-7311, November.
    7. Giulietti, Monica & Le Coq, Chloé & Willems, Bert & Anaya, Karim, 2019. "Smart Consumers in the Internet of Energy : Flexibility Markets & Services from Distributed Energy Resources," Other publications TiSEM 2edb43b5-bbd6-487d-abdf-7, Tilburg University, School of Economics and Management.
    8. De Groote, Olivier & Gautier, Axel & Verboven, Frank, 2024. "The political economy of financing climate policy — Evidence from the solar PV subsidy programs," Resource and Energy Economics, Elsevier, vol. 77(C).
    9. Cambini, Carlo & Soroush, Golnoush, 2019. "Designing grid tariffs in the presence of distributed generation," Utilities Policy, Elsevier, vol. 61(C).
    10. Mohammed Abdullah H. Alshehri & Youguang Guo & Gang Lei, 2023. "Energy Management Strategies of Grid-Connected Microgrids under Different Reliability Conditions," Energies, MDPI, vol. 16(9), pages 1-22, May.
    11. Catherine Bobtcheff, 2011. "Optimal Dynamic Management of a Renewable Energy Source under Uncertainty," Annals of Economics and Statistics, GENES, issue 103-104, pages 143-172.
    12. Sai Bravo & Carole Haritchabalet, 2023. "Prosumers: Grid Storage vs Small Fuel-Cell," Working papers of Transitions Energétiques et Environnementales (TREE) hal-04119625, HAL.
    13. Hansen, G.D. & Ohanian, L.E., 2016. "Neoclassical Models in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2043-2130, Elsevier.
    14. Ibrahim Abada, Andreas Ehrenmann, and Xavier Lambin, 2020. "On the Viability of Energy Communities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    15. Sai Bravo & Carole Haritchabalet, 2023. "Prosumers: Grid Storage vs Small Fuel-Cell," Working Papers hal-04119625, HAL.
    16. Gautier, Axel & Jacqmin, Julien & Poudou, Jean-Christophe, 2021. "Optimal grid tariffs with heterogeneous prosumers," Utilities Policy, Elsevier, vol. 68(C).
    17. Cortade, Thomas & Poudou, Jean-Christophe, 2022. "Peer-to-peer energy platforms: Incentives for prosuming," Energy Economics, Elsevier, vol. 109(C).
    18. Axel Gautier & Julien Jacqmin, 2020. "PV adoption: the role of distribution tariffs under net metering," Journal of Regulatory Economics, Springer, vol. 57(1), pages 53-73, February.
    19. Thomas P. Tangerås & Johannes Mauritzen, 2018. "Real‐time versus day‐ahead market power in a hydro‐based electricity market," Journal of Industrial Economics, Wiley Blackwell, vol. 66(4), pages 904-941, December.
    20. Rangel, Luiz Fernando, 2008. "Competition policy and regulation in hydro-dominated electricity markets," Energy Policy, Elsevier, vol. 36(4), pages 1292-1302, April.

    More about this item

    Keywords

    Batteries; Distributed generation; Renewable energy; Adoption rate;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:107:y:2022:i:c:s0140988321006174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.