Energy Storage and Renewable Energy: An Economic Approach
Abstract
I consider an economy with fossil fuels, intermittent renewable energy, and energy storage, identify the conditions under which energy storage is optimal, and analyze the long-run tendencies of the economy energy variables. The findings are twofold. First, the amount of energy stored in the economy is highly dependent on the shape of the demand and supply schedules. In particular, energy storage is fostered by the convexity of the marginal utility, the marginal cost function for fossil fuel energy, and the degree of volatility in renewable energy. Second, considering a low level of renewable energy capacity, storing energy is not welfare improving when the unit cost of providing fossil fuel energy is constant. By showing the influence that energy storage can have on energy generation decisions, I believe that the current work can be influential in a more generous treatment of energy supply in future energy-economy models.
Keywords
References
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Details
Primary Language
English
Subjects
-
Journal Section
Research Article
Authors
Tunç Durmaz
*
Yildiz Technical University
0000-0001-5693-3350
Türkiye
Publication Date
May 31, 2018
Submission Date
January 16, 2018
Acceptance Date
December 30, 2018
Published in Issue
Year 2018 Volume: 4 Number: 1