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An option game model applicable to multi-agent cooperation investment in energy storage projects

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  • Zhang, Mingming
  • Nie, Jinchen
  • Su, Bin
  • Liu, Liyun

Abstract

This paper proposes an option game model that is applicable to multi-agent cooperation investment in energy storage projects. A power grid enterprise and power generation enterprise are assumed to act as the cooperation investors. A revenue sharing coefficient and cost distribution coefficient are introduced to simulate the realistic cooperation behavior of energy storage investment. The uncertainty of electricity prices and investment cost are also integrated into the model. The proposed model is used to carry out a comparative static analysis and a case study. The results show the investment value and the optimal investment trigger for the cooperation investment. Compared with single-agent investment, cooperation investment will bring high investment value for the power generation enterprise, while the investment trigger would also be raised. The revenue sharing coefficient is positively related to the investment value and the investment trigger of the power grid enterprise. The cost distribution coefficient is positively related to the investment trigger of the power generation enterprise, but negatively related to the power grid enterprise. The volatility of electricity prices is positively related to the investment trigger, both for the power generation enterprise and the power grid enterprise. Also, the investment trigger of the power generation enterprise is more affected by the volatility of electricity prices. Learning effects and subsidy can reduce the investment trigger.

Suggested Citation

  • Zhang, Mingming & Nie, Jinchen & Su, Bin & Liu, Liyun, 2024. "An option game model applicable to multi-agent cooperation investment in energy storage projects," Energy Economics, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:eneeco:v:131:y:2024:i:c:s0140988324001051
    DOI: 10.1016/j.eneco.2024.107397
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