Storage and Renewable Energies: Friends or Foes?

Andrés-Cerezo, David and Natalia Fabra

No 19294, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Conventional wisdom posits that renewables and storage are strategic complements. However, this is not always true. In markets where renewable energies correlate positively with demand and renewable capacity is limited, increasing storage can harm renewable profits, and vice versa. In markets with multiple renewable technologies with negatively correlated availabilities, storage investments negatively affect one of them. These findings provide policy implications for the optimal timing and effectiveness of mandates or subsidies for renewables and storage aimed at reducing carbon emissions. We illustrate our results with simulations of the Spanish wholesale electricity market.

Date: 2024-07
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