Energy Storage and Renewable Energy: An Economic Approach

Tunç Durmaz
Additional contact information
Tunç Durmaz: Yildiz Technical University, Department of Economics

Yildiz Social Science Review, 2018, vol. 4, issue 1, 15-38

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: Energy storage; Fossil fuel energy; Renewable energy; Precautionary savings; Collocation method; Monte Carlo simulationsJournal: Yildiz Social Science Review (search for similar items in EconPapers)
JEL-codes: F00 F30 G00 G10 K00 K20 M00 M20 O10 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://yssr.yildiz.edu.tr/storage/upload/pdfs/1628146003-en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aye:journl:v:4:y:2018:i:1:p:15-38

Access Statistics for this article

More articles in Yildiz Social Science Review from Yildiz Technical University Contact information at EDIRC.
Bibliographic data for series maintained by Murat DONDURAN ().