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 contributions › Journal articles › Research › peer-review
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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 - The Energy Journal
JF - The Energy Journal
SN - 0195-6574
IS - 3
ER -