Joint research unit 7235

Towards carbon neutrality and energy independence in Europe: Can new storage and renewables push fossil fuels out?

Speaker :Milien Dhorne

Discutants : Quentin Hoarau (sénior) et Paul Maillet (junior)

Abstract:

Variable and renewable energy (VRE) sources lie at the core of the European energy decarbonating and independence strategy. A larger share of renewable generation requires flexibility options to cope with intermittency and production uncertainty. Among the flexibility solutions, energy storage has become increasingly interesting because of its versatility and recent high costs reductions. In this paper, we investigate the development potential of energy storage solutions as future dispatchable assets to compete with existing fossil fuel power plants. We propose a novel analysis in the light of the recent energy and geopolitical crisis, which might help the understanding of where Europe stands today in its path towards energy independence. We use a stochastic competitive optimization framework, calibrated on the current Western Europe power system, to derive the market value of new storage technologies and their impact on the price structure. We estimate the long-term equilibrium of flexibility capacities under different renewable horizons, CO2 prices and vehicle-to-grid (V2G) trajectories. We subsequently analyze incremental revenues and costs due to the presence of storage on the wholesale market and their distributions among renewable firms, conventional power plants and electricity consumers. We find evidence that, without additional support policies, the development of stationary storage remains moderate and located in a few countries of interest, mainly because of fierce competition from gas facilities. The contribution of V2G is predominant as it accounts for a large part of the new storage capacity. Finally, we highlight a detrimental effect of new storage on the revenues of fossil fuel power plants and a significant and positive effect on solar and wind revenues, making the case for a smart design of support public policies that integrates the transfers storage operates between market firms.

AGENDA

Tuesday 31 January 2023

Recherche et Economie et Socioéconomie Politique, des Institutions et des Régulations (RESPIR)

Nathalie Heinich (EHESS)

ANNULÉ ET REPORTÉ À UNE DATE ULTÉRIEURE

Valeur et mesure: aux limites de l’approche économique

Tuesday 31 January 2023

Valeur et mesure: aux limites de l’approche économique

Nathalie Heinich (EHESS)

ANNULÉ ET REPORTÉ À UNE DATE ULTÉRIEURE

Valeur et mesure: aux limites de l’approche économique

Tuesday 31 January 2023

Series of Webinars on Economics of Environment, Energy and Transport (SWEEET)

Aurelien Saussay(OFCE, Sciences Po, Paris), Misato Sato, (London School of Economics and Political Science) Francesco Vona (University of Milan) Layla O’Kane(Lightcast)

En visio

Who’s fit for the low-carbon transition? Emerging skills and wage gaps in job ad data

Tuesday 31 January 2023

Who’s fit for the low-carbon transition? Emerging skills and wage gaps in job ad data

Aurelien Saussay(OFCE, Sciences Po, Paris), Misato Sato, (London School of Economics and Political Science) Francesco Vona (University of Milan) Layla O’Kane(Lightcast)

En visio

Who’s fit for the low-carbon transition? Emerging skills and wage gaps in job ad data

Thursday 2 February 2023

Nouveaux doctorants

Nabil Daher, Michaël Guilloussou, Daniela Lima Rente, Maryam Soltani

Nouveaux doctorants

Thursday 2 February 2023

Lunch

Nabil Daher, Michaël Guilloussou, Daniela Lima Rente, Maryam Soltani

Nouveaux doctorants

Thursday 2 February 2023

Groupe de travail Economie Comportementale

Carole Treibich (Laboratoire d'Economie Appliquée de Grenoble GAEL)

Salle 101

Disentangling peer effects in transportation mode choice: the example of active commuting

Thursday 2 February 2023

Disentangling peer effects in transportation mode choice: the example of active commuting

Carole Treibich (Laboratoire d'Economie Appliquée de Grenoble GAEL)

Salle 101

Disentangling peer effects in transportation mode choice: the example of active commuting

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