Economics of Storage Systems - Interpretation of the dual solution in Energy Models using Linear Programming

Hydrogen or alternative synthetic energy carriers will become an integral part of a future non-fossil energy system. These energy carriers are mainly derived from electricity via electrolysis. This leads to a strong coupling between the hydrogen or synthetic fuel markets and the electricity market. Hydrogen and synthetic fuels offer unique characteristics when it comes to storage capabilities. The potential size of these storage systems can be much larger than conventional electricity storage systems including batteries and the costs are considerably lower. Storage systems smooth electricity prices. The paper investigates the impact of storage in a very simple coupled electricity-hydrogen system in a pure analytical form based on the dual solution of the primal problem as basis for the economic interpretation and on simple examples. The results indicate that the presence of new storage systems will have a rather strong impact on electricity prices and price variations. The smoothing might get so far that even the investment costs could be included in the electricity price. This would then create in an energy only market enough incentives for future investments. Still, this is an early hypothesis which needs much more detailed investigations.      «

Hydrogen or alternative synthetic energy carriers will become an integral part of a future non-fossil energy system. These energy carriers are mainly derived from electricity via electrolysis. This leads to a strong coupling between the hydrogen or synthetic fuel markets and the electricity market. Hydrogen and synthetic fuels offer unique characteristics when it comes to storage capabilities. The potential size of these storage systems can be much larger than conventional electricity storage sy...     »