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How Does Welfare from Load Shifting Electricity Policy Vary with Market Prices? Evidence from Bulk Storage and Electricity Generation

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Abstract

We model the electricity market to demonstrate that changes in the price of natural gas can cause the market and non-market impacts of bulk electricity storage to move in opposite directions. We provide evidence consistent with the model using a series of reduced form tests on data from 2005-2010. We then simulate installing bulk electricity storage on the US electric grid. We find that lower natural gas prices generally reduce the market gains and non-market costs of storage. However, direct non-market costs are still positive which means that there is no argument for subsidizing storage to mitigate pollution given the current mix of generating technologies; arguments in favor of bulk storage R&D subsidies ride on public good aspects of technology and dynamic investment incentives for intermittent renewables.

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  • J. Scott Holladay & Jacob LaRiviere, 2017. "How Does Welfare from Load Shifting Electricity Policy Vary with Market Prices? Evidence from Bulk Storage and Electricity Generation," Working Papers 2017-06, University of Tennessee, Department of Economics.
    • Handle: RePEc:ten:wpaper:2017-06
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    File URL: http://web.utk.edu/~jhollad3/RePEc/2017-06.pdf
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    Cited by:

    1. Bistline, John E.T. & Young, David T., 2020. "Emissions impacts of future battery storage deployment on regional power systems," Applied Energy, Elsevier, vol. 264(C).

    More about this item

    Keywords

    Electricity storage; natural gas; air pollution; energy policy;
    All these keywords.

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and 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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