Back

Competitive Energy Storage and the Duck Curve

Richard Schmalensee

July 2020

Power systems with high penetrations of solar generation need to replace solar output when it falls rapidly in the late afternoon – the duck curve problem. Storage is a carbon-free solution to this problem. This essay considers investment in generation and storage to minimize expected cost in a Boiteux-Turvey-style model of an electric power system with alternating daytime periods, with solar generation, and nighttime periods, without it. In the most interesting cases, if energy market prices are uncapped, all expected cost minima are long-run competitive equilibria, and the long-run equilibrium value of storage capacity minimizes expected system cost conditional on generation capacities.

Keywords: electricity, storage, solar, renewable, equilibrium

For Associates Only

As a benefit to our Associates, the latest Working Papers are embargoed for a period of up to six months before becoming accessible to the public. If you are interested in becoming an Associate or learning more about the benefits of sponsorship, please click here, or email us at ceepr@mit.edu

If you are a CEEPR Associate or CEEPR staff member, please visit the login page here: http://ceepr.mit.edu/associates