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Do lower electricity storage costs reduce greenhouse gas emissions?

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  • Linn, Joshua
  • Shih, Jhih-Shyang

Abstract

In the electricity sector, innovation in large-scale storage is anticipated to reduce costs and improve performance. The effect on greenhouse gas emissions of lower storage costs depends on the interactions between storage and the entire grid. The literature has disagreed on the role of storage in reducing emissions. In this paper we present a stylized model, which suggests that the effect of storage costs on emissions depends on the supply responsiveness of both fossil and renewable generators. Under common conditions in the United States, lower storage costs are more likely to reduce emissions when wind investment responds to equilibrium electricity prices and when solar investment does not. Simulations of a computational model of grid investment and operation confirm these intuitions. Moreover, because of its effect on coal and natural gas–fired supply responsiveness, introducing a carbon dioxide emissions price may increase the likelihood that lower storage costs reduce emissions.

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  • Linn, Joshua & Shih, Jhih-Shyang, 2019. "Do lower electricity storage costs reduce greenhouse gas emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 130-158.
  • Handle: RePEc:eee:jeeman:v:96:y:2019:i:c:p:130-158
    DOI: 10.1016/j.jeem.2019.05.003
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    2. Parlane, Sarah & Ryan, Lisa, 2020. "Optimal contracts for renewable electricity," Energy Economics, Elsevier, vol. 91(C).
    3. Yagi, Chihiro & Takeuchi, Kenji, 2023. "Estimating the value of energy storage: The role of pumped hydropower in the electricity supply network," Japan and the World Economy, Elsevier, vol. 68(C).
    4. Gyanendra Singh Sisodia & Einas Awad & Heba Alkhoja & Bruno S. Sergi, 2020. "Strategic business risk evaluation for sustainable energy investment and stakeholder engagement: A proposal for energy policy development in the Middle East through Khalifa funding and land subsidies," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2789-2802, September.
    5. Brown, David P. & Muehlenbachs, Lucija, 2024. "The value of electricity reliability: Evidence from battery adoption," Journal of Public Economics, Elsevier, vol. 239(C).
    6. Brown, David P. & Muehlenbachs, Lucija, 2023. "The Value of Electricity Reliability: Evidence from Battery Adoption," Working Papers 2023-5, University of Alberta, Department of Economics, revised 26 Jul 2024.
    7. Antweiler, Werner & Muesgens, Felix, 2024. "The new merit order: The viability of energy-only electricity markets with only intermittent renewable energy sources and grid-scale storage," Ruhr Economic Papers 1064, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Zhong, Zewei & Hu, Wuyang & Zhao, Xiaoli, 2024. "Rethinking electric vehicle smart charging and greenhouse gas emissions: Renewable energy growth, fuel switching, and efficiency improvement," Applied Energy, Elsevier, vol. 361(C).
    9. Beltrami, Filippo, 2024. "The impact of hydroelectric storage in Northern Italy’s power market," Energy Policy, Elsevier, vol. 191(C).
    10. Liebensteiner, Mario & Naumann, Fabian, 2022. "Can carbon pricing counteract renewable energies’ cannibalization problem?," Energy Economics, Elsevier, vol. 115(C).
    11. Beltrami, Filippo & Fontini, Fulvio & Grossi, Luigi, 2021. "The value of carbon emission reduction induced by Renewable Energy Sources in the Italian power market," Ecological Economics, Elsevier, vol. 189(C).
    12. Jesse Buchsbaum & Catherine Hausman & Johanna L Mathieu & Jing Peng, 2024. "Spillovers from ancillary services to wholesale energy markets," RAND Journal of Economics, RAND Corporation, vol. 55(1), pages 87-111, March.
    13. Liebensteiner, Mario & Haxhimusa, Adhurim & Naumann, Fabian, 2023. "Subsidized renewables’ adverse effect on energy storage and carbon pricing as a potential remedy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).

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    More about this item

    Keywords

    Bulk storage; Batteries; Innovation; Research and development; Wind power; Solar power; Renewables; Greenhouse gas emissions; Mathematical programming; Optimization;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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