How Does Welfare from Load Shifting Electricity Policy Vary with Market Prices? Evidence from Bulk Storage and Electricity Generation

Scott J. Holladay and Jacob LaRiviere

The Energy Journal, 2018, vol. 39, issue 6, 235-272

Abstract: We model the electricity market to demonstrate that changes in the price of natural gas can cause the market and non-market impacts of bulk electricity storage to move in opposite directions. We provide evidence consistent with the model using a series of reduced form tests on data from 2005-2010. We then simulate installing bulk electricity storage on the US electric grid. We find that lower natural gas prices generally reduce the market gains and non-market costs of storage. However, direct non-market costs are still positive which means that there is no argument for subsidizing storage to mitigate pollution given the current mix of generating technologies; arguments in favor of bulk storage R&D subsidies ride on public good aspects of technology and dynamic investment incentives for intermittent renewables.

Keywords: Electricity storage; Natural gas; Air pollution; Energy policy (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:39:y:2018:i:6:p:235-272

DOI: 10.5547/01956574.39.6.jhol

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