Soaking Up the Sun: Battery Investment, Renewable Energy, and Market Equilibrium / R. Andrew Butters, Jackson Dorsey, Gautam Gowrisankaran.

Format:

Book

Author/Creator:

Butters, R. Andrew.

Contributor:

National Bureau of Economic Research.

Dorsey, Jackson.

Gowrisankaran, Gautam.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29133.

NBER working paper series no. w29133

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Renewable energy and battery storage are seen as complementary technologies that can together facilitate reductions in carbon emissions. We develop and estimate a framework to calculate the equilibrium effects of large-scale battery storage. Using data from California, we find that the first storage unit breaks even by 2024 when the renewable energy share reaches 50%. Equilibrium effects are important: the first 5,000 MWh of storage capacity would reduce wholesale electricity prices by 5.7%, but an increase from 25,000 to 50,000 MWh would only reduce these prices by 2.7%. Large-scale batteries will reduce revenues to dispatchable generators and renewable energy sources. 'e equilibrium effects lead battery adoption to be virtually non-existent until 2030, without a storage mandate or subsidy. A 30% capital cost subsidy--such as the one in the U.S. Inflation Reduction Act--achieves 5,000 MWh of battery capacity by 2024, similar to the level required under California's storage mandate.

Notes:

Print version record

August 2021.