TY - GEN
T1 - Renewable generation investment with differentiated downstream competition
AU - Badia, Brendan
AU - Berry, Randall
AU - Wei, Ermin
PY - 2019/9
Y1 - 2019/9
N2 - With the cost of renewable electricity generation like solar and wind decreasing, the share of total generation provided by such sources is growing. This leads to questions of how utilities should deal with integrating renewables into the grid. An interesting and not commonly studied case of this is when firms consume significant amounts of electricity in order to serve their customers (e.g., electric vehicle charging stations) and can get it either from the grid or through renewable generation they install themselves. Furthermore, if they have more renewable generation than needed to serve their customers they can sell it back to the grid. Therefore, the cost of electricity and value of excess generation affects firm's interest in renewable generation, and has impacts on both the grid (by affecting how much renewable generation firms will provide) as well as the downstream market (by affecting the cost structure at both firms and how they compete).We study this though a two stage oligopolistic model. In the first stage, two differentiated firms choose a level of investment in renewable generation. In the second stage, they compete over prices to serve customers. We show equilibria always exist, and the difference between price of electricity and the feed-in tariff has potentially large implications for the number and type of equilibria as well as aggregate outcomes.
AB - With the cost of renewable electricity generation like solar and wind decreasing, the share of total generation provided by such sources is growing. This leads to questions of how utilities should deal with integrating renewables into the grid. An interesting and not commonly studied case of this is when firms consume significant amounts of electricity in order to serve their customers (e.g., electric vehicle charging stations) and can get it either from the grid or through renewable generation they install themselves. Furthermore, if they have more renewable generation than needed to serve their customers they can sell it back to the grid. Therefore, the cost of electricity and value of excess generation affects firm's interest in renewable generation, and has impacts on both the grid (by affecting how much renewable generation firms will provide) as well as the downstream market (by affecting the cost structure at both firms and how they compete).We study this though a two stage oligopolistic model. In the first stage, two differentiated firms choose a level of investment in renewable generation. In the second stage, they compete over prices to serve customers. We show equilibria always exist, and the difference between price of electricity and the feed-in tariff has potentially large implications for the number and type of equilibria as well as aggregate outcomes.
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U2 - 10.1109/ALLERTON.2019.8919931
DO - 10.1109/ALLERTON.2019.8919931
M3 - Conference contribution
AN - SCOPUS:85077795331
T3 - 2019 57th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2019
SP - 157
EP - 164
BT - 2019 57th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2019
PB - Institute of Electrical and Electronics Engineers Inc.
T2 - 57th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2019
Y2 - 24 September 2019 through 27 September 2019
ER -