Past Event

INET Researcher Seminar: Niall Farrell, Sustainability - “Can risk exposure improve decision-making in the presence of uncertainty? The private and social economics of efficient electricity storage operation"

As decarbonisation progresses, increasing amounts of electricity storage will be required to align inelastic intermittent renewable generation with largely inelastic consumption. Maximising the value of additional storage capacity requires effiicient operation. This paper analyses the influence of price forecast errors, risk aversion and hedging products on electricity storage operation. Independently, both forecast errors and risk-aversion reduce efficiency of operation. Inefficiencies associated with forecast errors are greater than inefficiencies associated with risk-averse behaviour. Together, risk-averse behaviour can reduce the inefficiencies associated with forecast errors. Therefore, in the presence of future market price uncertainty, additional market price risk exposure can increase, rather than decrease, total operational efficiency. Common market measures to correct for market price risk may therefore decrease the efficiency of storage operation.


02 November 2017 15:00 - 16:30


INET Oxford

Eagle House, Walton Well Road, Oxford, OX2 6ED

Economics of Sustainability