Storage and Renewable Energies: Friends or Foes?

David Andrés-Cerezo () and Natalia Fabra ()
Additional contact information
David Andrés-Cerezo: Universitat Autònoma de Barcelona and BSE, https://www.uab.cat/
Natalia Fabra: CEMFI, Centro de Estudios Monetarios y Financieros, https://cemfi.es/

Working Papers from CEMFI

Abstract: Decarbonizing the power sector requires major investments in renewables and storage. Though often seen as complementary, these technologies can act as substitutes from an economic perspective. When renewable output correlates positively with demand and capacity is low, storage may lower renewable profits, and viceversa, especially with strategic thermal producers. In markets with negatively correlated renewable availabilities, like solar and wind, storage can benefit one while disadvantaging the other. These findings inform policies on the timing and effectiveness of mandates or subsidies, suggesting that solar investments may need an initial push before supporting storage. Simulations of the Spanish market show that, at high solar penetration, storage boosts solar but reduces wind profits.

Keywords: Energy storage; renewable energy; mandates; market power; transmission constraints; electricity markets. (search for similar items in EconPapers)
JEL-codes: L94 Q40 Q42 Q48 Q50 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-com, nep-ene, nep-env and nep-reg
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