Efficient Storage Capacity in Power Systems with Thermal and Renewable Generation

Abstract

Power systems with high shares of wind and solar power have to balance their intermittent nature. Pumped‐hydro storage plants can provide the required flexibility, while thermal backup plants offer an alternative. This paper proposes a model based on peak‐load‐pricing theory to describe the efficient technology portfolio. Drawing on a load duration curve, we derive the efficient storage capacity and discuss its dependence on cost parameters. It is shown that renewable generation affects the efficient storage capacity by changing the shape of the residual load duration curve, while limited time periods with renewable generation in excess of load do not necessarily affect the level of storage. A case study for Germany applies the model and highlights the impact of CO2 prices on storage efficiency.

Keywords: electricity storage, peak-load-pricing, renewable energy

JEL Classification: C61, D24, L94, Q41, Q42