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A VCG Auction for Electricity Storage

Author

Listed:
  • Thomas Greve

    (Energy Policy Research Group, University of Cambridge)

  • Michael G. Pollitt

    (Energy Policy Research Group, University of Cambridge)

Abstract

Energy storage seems set to play a key role in managing and balancing the future electricity system. Storage can act as a generator and as a load, providing both energy and ancillary services such as fast frequency response and operating reserve. Therefore, it can provide the desired flexibility for the network. Current mechanism designs do not take advantage of the full potential of a given storage facility and the auctions used to buy and sell potential storage products have design flaws. This paper gives an overview of how storage products are bought and sold today and the problems of the current designs. It then presents a new mechanism design to integrate storage in the most efficient way, based on social welfare.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Thomas Greve & Michael G. Pollitt, 2016. "A VCG Auction for Electricity Storage," Working Papers EPRG 1613, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1613
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    File URL: https://www.jbs.cam.ac.uk/wp-content/uploads/2023/12/eprg-wp1613.pdf
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    Citations

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    Cited by:

    1. Rappaport, Ron D. & Miles, John, 2017. "Cloud energy storage for grid scale applications in the UK," Energy Policy, Elsevier, vol. 109(C), pages 609-622.
    2. Greve, T. & Pollitt, M., 2016. "A future auction mechanism for distributed generation," Cambridge Working Papers in Economics 1672, Faculty of Economics, University of Cambridge.
    3. Waterson, Michael, 2017. "The characteristics of electricity storage, renewables and markets," Energy Policy, Elsevier, vol. 104(C), pages 466-473.
    4. Arjan S. Sidhu & Michael G. Pollitt & Karim L. Anaya, 2017. "A Social Cost Benefit Analysis of Grid-Scale Electrical Energy Storage Projects: Evaluating the Smarter Network Storage Project," Working Papers EPRG 1710, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Intini, Mario & Waterson, Michael, 2020. "Do British wind generators behave strategically in response to the Western Link interconnector?," The Warwick Economics Research Paper Series (TWERPS) 1242, University of Warwick, Department of Economics.

    More about this item

    Keywords

    Electricity storage; interconnectors; auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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