Modeling strategic electricity storage: The case of pumped hydro storage in Germany

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Modeling strategic electricity storage: The case of pumped hydro storage in Germany. / Kemfert, Claudia; Schill, Wolf Peter.
In: Energy Journal, Vol. 32, No. 3, 2011, p. 59-87.

Research output: Journal contributionsJournal articlesResearchpeer-review

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Kemfert C, Schill WP. Modeling strategic electricity storage: The case of pumped hydro storage in Germany. Energy Journal. 2011;32(3):59-87. doi: 10.5547/ISSN0195-6574-EJ-Vol32-No3-3

Bibtex

@article{670d536303c748e1a09eb9771dddb20b,
title = "Modeling strategic electricity storage: The case of pumped hydro storage in Germany",
abstract = "We study the strategic utilization of storage in imperfect electricity markets. We apply a game-theoretic Cournot model to the German power market and analyze different counterfactual and realistic cases of pumped hydro storage. Our main finding is that both storage utilization and storage-related welfare effects depend on storage ownership and the operator's involvement in conventional generation. Strategic operators generally under-utilize owned storage capacity. Strategic storage operation may also lead to welfare losses, in particular if the total storage capacity is controlled by an oligopolistic generator that also owns conventional generation capacity. Yet in the current German situation, pumped hydro storage is not a relevant source of market power.",
keywords = "Economics, electric Power Markets, Storage, Market Power, Nash-Cournot",
author = "Claudia Kemfert and Schill, {Wolf Peter}",
year = "2011",
doi = "10.5547/ISSN0195-6574-EJ-Vol32-No3-3",
language = "English",
volume = "32",
pages = "59--87",
journal = "Energy Journal",
issn = "0195-6574",
publisher = "International Association for Energy Economics",
number = "3",

}

RIS

TY - JOUR

T1 - Modeling strategic electricity storage

T2 - The case of pumped hydro storage in Germany

AU - Kemfert, Claudia

AU - Schill, Wolf Peter

PY - 2011

Y1 - 2011

N2 - We study the strategic utilization of storage in imperfect electricity markets. We apply a game-theoretic Cournot model to the German power market and analyze different counterfactual and realistic cases of pumped hydro storage. Our main finding is that both storage utilization and storage-related welfare effects depend on storage ownership and the operator's involvement in conventional generation. Strategic operators generally under-utilize owned storage capacity. Strategic storage operation may also lead to welfare losses, in particular if the total storage capacity is controlled by an oligopolistic generator that also owns conventional generation capacity. Yet in the current German situation, pumped hydro storage is not a relevant source of market power.

AB - We study the strategic utilization of storage in imperfect electricity markets. We apply a game-theoretic Cournot model to the German power market and analyze different counterfactual and realistic cases of pumped hydro storage. Our main finding is that both storage utilization and storage-related welfare effects depend on storage ownership and the operator's involvement in conventional generation. Strategic operators generally under-utilize owned storage capacity. Strategic storage operation may also lead to welfare losses, in particular if the total storage capacity is controlled by an oligopolistic generator that also owns conventional generation capacity. Yet in the current German situation, pumped hydro storage is not a relevant source of market power.

KW - Economics

KW - electric Power Markets

KW - Storage

KW - Market Power

KW - Nash-Cournot

UR - http://www.scopus.com/inward/record.url?scp=80053134680&partnerID=8YFLogxK

U2 - 10.5547/ISSN0195-6574-EJ-Vol32-No3-3

DO - 10.5547/ISSN0195-6574-EJ-Vol32-No3-3

M3 - Journal articles

AN - SCOPUS:80053134680

VL - 32

SP - 59

EP - 87

JO - Energy Journal

JF - Energy Journal

SN - 0195-6574

IS - 3

ER -