Market Impacts of Energy Storage in a Transmission-Constrained Power System

—Environmental concerns have motivated governments in the European Union and elsewhere to set ambitious targets for generation from renewable energy (RE) technologies and to offer subsidies for their adoption along with priority grid access. However, because RE technologies like solar and wind power are intermittent, their penetration places greater strain on existing conventional power plants that need to ramp up more often. In turn, energy storage technologies, e.g., pumped hydro storage or compressed air storage, are proposed to offset the intermittency of RE technologies and to facilitate their integration into the grid. We assess the economic and environmental consequences of storage via a complementarity model of a stylized Western European power system with market power, representation of the transmission grid, and uncertainty in RE output. Although storage helps to reduce congestion and ramping costs, it may actually increase greenhouse gas emissions from conventional power plants in a perfectly competitive setting. Conversely, strategic use of storage by producers renders it less effective at curbing both congestion and ramping costs, while having no net overall impact on emissions

Market Power with Combined Heat and Power Production in the Nordic Energy System

The trend toward increasing energy efficiency and variable renewable energy (VRE) production has implications for combined heat and power (CHP) plants, which operate in both the price-driven power market and the district heating (DH) sector. Since CHP will be important in VRE integration, we develop a complementarity model to analyze CHP producers' roles in integrated markets. We use a Nordic case study to gain insights into (i) the effect of the link between CHP and DH on market power and (ii) market power's impact on operations in the DH sector. The results indicate that (i) the link of CHP to DH supply can increase market power and (ii) market power can induce shifts in DH production from heat-only to CHP