TY - JOUR
T1 - Economic analysis of batteries
T2 - Impact on security of electricity supply and renewable energy expansion in Germany
AU - Coester, Andreas
AU - Hofkes, Marjan W.
AU - Papyrakis, Elissaios
PY - 2020/10/1
Y1 - 2020/10/1
N2 - Increasing amounts of fluctuating renewable energy lead to decreasing electricity prices and impair security of electricity supply. Consequently, sustainable and economically feasible solutions need to be found to ensure both ongoing renewable energy expansion and stable electricity supply. We examine the impact of batteries on security of the electricity supply and achieving renewable energy expansion. For this purpose we develop an electricity market model that enables the simulation of batteries both as an economic-driven investment option and as a government subsidized option. We present six policy scenarios in which batteries are utilized as an option that is subsidized by the government to secure electricity supply and engender renewable energy expansion. Our simulations, based on empirical data, indicate that, in a free market, battery investments are not profitable for private investors. On the other hand, these six policy scenarios show that by subsidizing investments in batteries governments could ensure a secure electricity supply as well as ongoing renewable energy expansion. A comparison to similar policy scenarios that do not adopt batteries indicates that the total sum of government subsidies and external costs is up to 36% lower when utilizing batteries.
AB - Increasing amounts of fluctuating renewable energy lead to decreasing electricity prices and impair security of electricity supply. Consequently, sustainable and economically feasible solutions need to be found to ensure both ongoing renewable energy expansion and stable electricity supply. We examine the impact of batteries on security of the electricity supply and achieving renewable energy expansion. For this purpose we develop an electricity market model that enables the simulation of batteries both as an economic-driven investment option and as a government subsidized option. We present six policy scenarios in which batteries are utilized as an option that is subsidized by the government to secure electricity supply and engender renewable energy expansion. Our simulations, based on empirical data, indicate that, in a free market, battery investments are not profitable for private investors. On the other hand, these six policy scenarios show that by subsidizing investments in batteries governments could ensure a secure electricity supply as well as ongoing renewable energy expansion. A comparison to similar policy scenarios that do not adopt batteries indicates that the total sum of government subsidies and external costs is up to 36% lower when utilizing batteries.
KW - Batteries
KW - Electricity market design
KW - Energy security
KW - Renewable energy
UR - http://www.scopus.com/inward/record.url?scp=85086439933&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85086439933&partnerID=8YFLogxK
U2 - 10.1016/j.apenergy.2020.115364
DO - 10.1016/j.apenergy.2020.115364
M3 - Article
AN - SCOPUS:85086439933
VL - 275
SP - 1
EP - 14
JO - Applied Energy
JF - Applied Energy
SN - 0306-2619
IS - 1
M1 - 115364
ER -