Optimal storage and transmission investments in a bilevel electricity market model
Weibelzahl M, Märtz A (2020)
Publication Type: Journal article
Publication year: 2020
Journal
Book Volume: 287
Pages Range: 911-940
Journal Issue: 2
DOI: 10.1007/s10479-018-2815-1
Abstract
This paper analyzes the interplay of transmission and storage investments in a multistage game that we translate into a bilevel market model. In particular, on the first level we assume that a transmission system operator chooses optimal line investments and a corresponding optimal network fee. On the second level we model competitive firms that trade energy on a zonal market with limited transmission capacities and decide on their optimal storage facility investments. To the best of our knowledge, we are the first to analyze interdependent transmission and storage facility investments in a zonal market environment that accounts for the described hierarchical decision structure. As a first best benchmark, we also present an integrated, single-level problem that may be interpreted as a long-run nodal pricing model. Our numerical results show that adequate storage facility investments of firms may in general have the potential to reduce the amount of line investments of the transmission system operator. However, our bilevel zonal pricing model may yield inefficient investments in storages, which may be accompanied by suboptimal network facility extensions as compared to the nodal pricing benchmark. In this context, the chosen zonal configuration of the network will highly influence the equilibrium investment outcomes including the size and location of the newly invested facilities. As zonal pricing is used for instance in Australia or Europe, our models may be seen as valuable tools for evaluating different regulatory policy options in the context of long-run investments in storage and network facilities.
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Germany (DE)How to cite
APA:
Weibelzahl, M., & Märtz, A. (2020). Optimal storage and transmission investments in a bilevel electricity market model. Annals of Operations Research, 287(2), 911-940. https://dx.doi.org/10.1007/s10479-018-2815-1
MLA:
Weibelzahl, Martin, and Alexandra Märtz. "Optimal storage and transmission investments in a bilevel electricity market model." Annals of Operations Research 287.2 (2020): 911-940.
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