Influences of mechanisms on investment in renewable energy storage equipment

Wei Chen (), Yongle Tian (), Kaiming Zheng () and Nana Wan ()
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Wei Chen: Chengdu University of Technology
Yongle Tian: University of Electronic Science and Technology of China
Kaiming Zheng: Yunnan University of Finance and Economics
Nana Wan: Southwest University of Science and Technology

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 11, No 19, 12569-12595

Abstract: Abstract This paper explores the impacts of a subsidy mechanism (SM) and a renewable portfolio standard mechanism (RPSM) on investment in renewable energy storage equipment. A two-level electricity supply chain is modeled, comprising a renewable electricity generator, a traditional electricity generator, and an electricity retailer. The renewable generator decides the renewable energy storage equipment investment and simultaneously works with the traditional generator to provide electricity to the retailer based on optimal equilibrium solutions under the two mechanisms. The main conclusions drawn are as follows: (1) Compared with RPSM, SM is more conducive to investment in renewable energy storage equipment and results in greater profit for the supply chain enterprises. (2) With increases in the unit subsidy, the prices of renewable and traditional electricity decrease, demand for renewable electricity increases, and demand for traditional electricity decreases. (3) With increases in the green certificate price, the price of renewable electricity will not necessarily decrease. (4) With increases in the proportion of renewable electricity generated, the demand for renewable electricity will decrease. Finally, we propose three extensions to the model to further verify our conclusions. The government should adopt SM to encourage generator R to invest in energy storage equipment and provide a lower electricity price for consumers. Furthermore, the government should set a reasonable proportion of renewable energy for the electricity retailer under RPSM.

Keywords: Storage equipment; Subsidy Mechanism; Renewable portfolio standard mechanism; Stackelberg game (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02580-4

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