IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v45y2024i2p1-21.html
   My bibliography  Save this article

Carbon-free Electricity Supply in a Cournot Wholesale Market: Israel

Author

Listed:
  • Irena Milstein
  • Asher Tishler
  • Chi-Keung Woo

Abstract

We develop a two-stage model to analyze a Cournot wholesale electricity market in which competing firms use photovoltaics augmented with batteries (PVB) or combined cycle gas turbines (CCGTs) to meet time-varying demands. Capturing the complex interactions of output and investment decisions made by multiple profit-maximizing PVB and CCGT firms, our model yields the market’s long-run equilibrium of capacity mix and short-run equilibrium of electricity generation and price levels. Accounting for the sun’s irradiation that determines solar generation level, our model computes the battery cost reduction necessary for batteries entering the optimal capacity mix. Using Israel as a case study, we show how declining battery cost may cause PVB firms to displace CCGT firms, resulting in carbon-free electricity supply as a market-based outcome. The battery cost threshold initiating this outcome is ~24% of CCGT’s capacity cost, implying that natural gas is a transitional fuel in Israel’s pathway to deep decarbonization.

Suggested Citation

  • Irena Milstein & Asher Tishler & Chi-Keung Woo, 2024. "Carbon-free Electricity Supply in a Cournot Wholesale Market: Israel," The Energy Journal, , vol. 45(2), pages 1-21, March.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:2:p:1-21
    DOI: 10.5547/01956574.45.2.imil
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.45.2.imil
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.45.2.imil?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
    ---><---

    References listed on IDEAS

    as
    1. Joachim Geske & Richard Green, 2020. "Optimal Storage, Investment and Management under Uncertainty: It is Costly to Avoid Outages!," The Energy Journal, , vol. 41(2), pages 1-28, March.
    2. David M Newbery, 2018. "What future(s) for liberalized electricity markets: efficient, equitable or innovative?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    3. Khan, Agha Salman M. & Verzijlbergh, Remco A. & Sakinci, Ozgur Can & De Vries, Laurens J., 2018. "How do demand response and electrical energy storage affect (the need for) a capacity market?," Applied Energy, Elsevier, vol. 214(C), pages 39-62.
    4. Paul J. Burke & Ashani Abayasekara, 2018. "The Price Elasticity of Electricity Demand in the United States: A Three-Dimensional Analysis," The Energy Journal, , vol. 39(2), pages 123-146, March.
    5. Woo, C.K. & Chen, Y. & Olson, A. & Moore, J. & Schlag, N. & Ong, A. & Ho, T., 2017. "Electricity price behavior and carbon trading: New evidence from California," Applied Energy, Elsevier, vol. 204(C), pages 531-543.
    6. Sani Hassan, Abubakar & Cipcigan, Liana & Jenkins, Nick, 2017. "Optimal battery storage operation for PV systems with tariff incentives," Applied Energy, Elsevier, vol. 203(C), pages 422-441.
    7. Engels, Jonas & Claessens, Bert & Deconinck, Geert, 2019. "Techno-economic analysis and optimal control of battery storage for frequency control services, applied to the German market," Applied Energy, Elsevier, vol. 242(C), pages 1036-1049.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Milstein, I. & Tishler, A. & Woo, C.K., 2024. "The effect of PV generation's hourly variations on Israel's solar investment," Energy Economics, Elsevier, vol. 136(C).

    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. Ali Darudi & Hannes Weigt, 2024. "Review and Assessment of Decarbonized Future Electricity Markets," Energies, MDPI, vol. 17(18), pages 1-38, September.
    2. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    3. Best, Rohan & Li, Han & Trück, Stefan & Truong, Chi, 2021. "Actual uptake of home batteries: The key roles of capital and policy," Energy Policy, Elsevier, vol. 151(C).
    4. Li, Raymond & Woo, Chi-Keung & Cox, Kevin, 2021. "How price-responsive is residential retail electricity demand in the US?," Energy, Elsevier, vol. 232(C).
    5. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    6. Yang, Yuting, 2022. "Electricity interconnection with intermittent renewables," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    7. Csereklyei, Zsuzsanna & Qu, Songze & Ancev, Tihomir, 2019. "The effect of wind and solar power generation on wholesale electricity prices in Australia," Energy Policy, Elsevier, vol. 131(C), pages 358-369.
    8. Bell, William Paul & Zheng, Xuemei, 2018. "Inclusive growth and climate change adaptation and mitigation in Australia and China : Removing barriers to solving wicked problems," MPRA Paper 84509, University Library of Munich, Germany.
    9. Quemin, Simon & Trotignon, Raphaël, 2021. "Emissions trading with rolling horizons," Journal of Economic Dynamics and Control, Elsevier, vol. 125(C).
    10. Zhang, Yijie & Ma, Tao & Elia Campana, Pietro & Yamaguchi, Yohei & Dai, Yanjun, 2020. "A techno-economic sizing method for grid-connected household photovoltaic battery systems," Applied Energy, Elsevier, vol. 269(C).
    11. Claude Crampes & Yassine Lefouili, 2021. "Green energy pricing for digital europe," Post-Print hal-03352748, HAL.
    12. Beuse, Martin & Dirksmeier, Mathias & Steffen, Bjarne & Schmidt, Tobias S., 2020. "Profitability of commercial and industrial photovoltaics and battery projects in South-East-Asia," Applied Energy, Elsevier, vol. 271(C).
    13. Vakilifard, Negar & A. Bahri, Parisa & Anda, Martin & Ho, Goen, 2018. "A two-level decision making approach for optimal integrated urban water and energy management," Energy, Elsevier, vol. 155(C), pages 408-425.
    14. Nor Salwati Othman & Nurul Hezlin Mohamed Hariri, 2021. "Estimating the Causality and Elasticities of Residential Electricity Consumption for Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 335-346.
    15. Deakin, Matthew & Bloomfield, Hannah & Greenwood, David & Sheehy, Sarah & Walker, Sara & Taylor, Phil C., 2021. "Impacts of heat decarbonization on system adequacy considering increased meteorological sensitivity," Applied Energy, Elsevier, vol. 298(C).
    16. Uddin, Main & Wang, Liang Choon & Smyth, Russell, 2021. "Do government-initiated energy comparison sites encourage consumer search and lower prices? Evidence from an online randomized controlled experiment in Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 167-182.
    17. Luis R. Boscán, 2020. "European Union retail electricity markets in the Green Transition: The quest for adequate design," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 9(1), January.
    18. Woo, C.K. & Liu, Y. & Zarnikau, J. & Shiu, A. & Luo, X. & Kahrl, F., 2018. "Price elasticities of retail energy demands in the United States: New evidence from a panel of monthly data for 2001–2016," Applied Energy, Elsevier, vol. 222(C), pages 460-474.
    19. Best, Rohan & Burke, Paul J., 2022. "Effects of renting on household energy expenditure: Evidence from Australia," Energy Policy, Elsevier, vol. 166(C).
    20. Jiyoung Eum & Yongki Kim, 2020. "Analysis on Operation Modes of Residential BESS with Balcony-PV for Apartment Houses in Korea," Sustainability, MDPI, vol. 13(1), pages 1-9, December.

    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:sae:enejou:v:45:y:2024:i:2:p:1-21. 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: SAGE Publications (email available below). General contact details of provider: .

    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.