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Increasing electricity generation from variable renewable energy sources, such as wind and solar, has led to interest in additional short‐term and long‐term storage capacities. The core objective of this paper is to investigate the costs and the future market prospects of different electricity storage options, such as short‐term battery storage and long‐term storage as pumped hydro storage, as well as hydrogen and methane from power‐to‐gas conversion technologies. The method of approach is based on a formal economic framework with a dynamic component to derive scenarios up to 2040. The major conclusion is that the economic prospects of storage are not very bright. For all market‐based storage technologies it will become hard to compete in the wholesale electricity markets and for decentralized (battery) systems it will be hard to compete with the end users’ electricity price. The core problem of virtually all categories of storage are low full‐load hours (for market‐based systems) and low full charge/discharge cycles (for decentralized batteries). However, any new storage capacity should be constructed only in a coordinated way and if there is a clear sign for new excess production, in this case from variable renewables. In addition, for hydrogen and methane there could be better economic prospects in the transport sector due to both, higher energy price levels as well as a general lack of low carbon fuel alternatives. © 2020 The Authors. Greenhouse Gases: Science and Technology published by Society of Chemical Industry and John Wiley & Sons, Ltd.

Since the early beginnings of the electricity system, storage has been of high relevance for balancing supply and demand. Through expanded electricity production by variable renewable technologies such as wind and photovoltaics, the discussion about new options for storage technologies is emerging. In addition, the electricity markets were subject to remarkable alterations. Some developments which describe these changes are increasing electricity generation from variable renewables and the continuing decentralization. These developments have led, among other required transformations, to demands for additional capacities of storage technologies. However, their economics will play a crucial role in their effective market penetration in the following years. The core objective of this work is to conduct a review on the relevance of storage options for electricity and its costs, economics, welfare effects, and on issues of electricity market design. In addition, based on expected Technological Learning prospects for future economics are derived. The major result is that the perspectives of electricity storage systems from an economic viewpoint are highly dependent on the storage's operation time, the nature of the overall system, availability of other flexibility options, and sector coupling. All market-based storage technologies have to prove their performance in the large electricity markets or if applied decentralized, the (battery) systems compete with the electricity prices at the final customers level when the battery costs are also taken into consideration. Yet, new storage capacities should only be added when it is clear that electricity generation from variable renewables will also be expanded in a way that excess generation is expected. This article is categorized under: Policy and Economics > Green Economics and Financing Energy and Power Systems > Energy Infrastructure Emerging Technologies > Energy Storage.

Electricity generation from variable renewable energy sources such as wind and solar has grown in some countries at such a high rate that long‐term storage becomes relevant. The main rationale of power‐to‐gas (P2G) conversion of excess power is that the capacity of the gas pipelines and gas storage is much higher than that of the electricity transmission lines. This paper investigates the market prospects of hydrogen and methane from P2G conversion as a long‐term electricity storage option. Of specific interest is the future development of investment costs, economies‐of‐scale, the impact of the electricity price, and its distribution as well as possible locations. We conclude that from an economic point‐of‐view, the future prospects of all P2G technologies are much less promising than currently indicated in several papers and discussions. It will become very hard for P2G to compete in the electricity markets despite a high technological learning potential. However, for both hydrogen and methane, there are prospects for use in the transport sector. Already today compressed gas vehicles are by and large competitive. This article is categorized under: Concentrating Solar Power > Economics and Policy Energy Systems Economics > Economics and Policy Energy Systems Analysis > Systems and Infrastructure Energy and Transport > Economics and Policy

The design of effective future promotion polices for photovoltaics (PV) needs the lessons learned from past experiences. The major objective of this study is to analyse the major PV markets over time to identify the effects caused by the two main promotion schemes: the achievement of economic profitability by means of Feed-in Tariffs (FiTs) and the use of the Willingness-to-Pay (WTP) in investment subsidies. For this purpose, indicators have been defined that characterise the promotion policies for grid-connected PV since the middle of the 1990s: (i) dissemination effectiveness, (ii) costs for the public, (iii) development of system prices over time, (iv) consumer's WTP and (v) profitability for the consumer. The following are the major conclusions of this analysis. (i) If financial incentive programmes are implemented over a reasonable time frame, they work with respect to both significant price decreases as well as increases in quantities. (ii) FiT schemes and also investment subsidies and combined concepts are able to increase the market penetration and the diffusion of PV systems. They are especially relevant in the context of optimising the own use of PV electricity generated. (iii) Regarding the design of promotion systems, it is important that on the one hand, they consider customers WTP, and on the other hand, they include a well-defined dynamic component, which considers the effects of Technological Learning. In this context, capacity corridors, as were introduced in Germany, are essential. This tool allows predictable legislations and the correction of incentive payments without generating boom and bust cycles. Copyright © 2012 John Wiley & Sons, Ltd.

In the last decade of the 20th century a wide variety of promotion strategies increased the market penetration of small grid-connected PV systems world-wide. The objective of this paper is to assess the impact of these promotion strategies on the market for and on the economic performance of small grid-connected PV systems. The most important conclusions of this analysis are: Pure cost-effectiveness is not crucial for private customers. Affordability is rather what counts. Non-monetary issues play an important role for a substantial increase in market deployment. Comprehensive accompanied information and education activities are also important along with financial incentives. There are still considerable barriers in the market: on the one hand transparent and competitive markets exist in only a few countries; on the other hand non-monetary transaction costs still represent a major barrier. Progress with respect to cost reduction has been achieved, but mainly for non-module components. Copyright © 2004 John Wiley & Sons, Ltd.

In times of low oil prices, oil demand in OECD countries has not rebounded as textbook economic theory would suggest. On the other hand, natural gas demand has increased, despite prices being at almost the same level as in 1985. In this paper, the impact of volatile prices on oil demand is investigated. Different econometric approaches are applied. The major conclusions of these investigations are: (i) with respect to the choice of fuels, strong patterns of asymmetry exist; (ii) the maximum historical oil price is the dominating parameter on residual oil demand; and (iii) volatile prices have a greater influence on energy demand than high but rather constant prices.