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SUMMARY:Merchant Storage Investment in a Restructured Electricity Industry
  - Ramteen Sioshansi (Ohio State University)
DTSTART:20190319T111500Z
DTEND:20190319T120000Z
UID:TALK121264@talks.cam.ac.uk
CONTACT:INI IT
DESCRIPTION:Restructuring and liberalisation of the electricity industry c
 reates opportunities for investment in energy storage\, which could be und
 ertaken by a profit-maximising merchant storage operator. Because such a f
 irm is concerned solely with maximising its own profit\, the resulting sto
 rage-investment decision may be socially suboptimal (or detrimental). This
  paper develops a bi-level model of an imperfectly competitive electricity
  market. The modelling framework assumes electricity-generation and storag
 e-operations decisions at the lower level and storage investment at the up
 per level. Our analytical results demonstrate that a relatively high (low)
  amount of market power in the generation sector leads to low (high) stora
 ge-capacity investment by the profit-maximising storage operator relative 
 to a welfare maximiser. This can result in net social welfare losses with 
 a profit-maximising storage operator compared to a no-storage case. Moreov
 er\, there are guaranteed to be net social welfare losses with a profit-ma
 ximising storage operator if the generation sector is sufficiently competi
 tive. Using a charge on generation ramping between off- and on-peak period
 s\, we induce the profit-maximising storage operator to invest in the same
  level of storage capacity as the welfaremaximising firm. Such a ramping c
 harge can increase social welfare above the levels that are attained with 
 a welfare-maximising storage operator.Afzal S. Siddiqui\, Ramteen Sioshans
 id and Antonio J. Conejo
LOCATION:Seminar Room 1\, Newton Institute
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