Topics in sustainable energy : an economic analysis of net demand volatility management.

A low carbon future poses the question, how will low carbon technology be integrated? One possibility is to retain back-up conventional generators. Other possibilities are technical energy storage, and for demand side management to play a more important role. With the advent of smart metering it is possible consumers could be given real-time prices from their energy supplier. If energy storage is to be implemented investors and stakeholders must have an idea of the likely revenues. Chapter 1 estimates arbitrage revenues for a small price taking store in a GB 2050 electricity market scenario. We do so by estimating equilibrium market prices, which provide us with a market based approach to valuation. It also estimates the effect that the characteristics of the store, and market concentration has on revenues. If energy storage is to be installed in enough capacity to smooth out large fluctuations in net demand then the economics of a small, price taking, store are no longer valid. An energy store would become a strategic player in the market and a Nash equilibrium between generators and the store must be reached. Chapter 2 proposes a methodology for estimating large scale energy storage strategies and revenues, and estimates them. Chapter 3 then turns to address time-of-use (TOU) tariffs. One potential threat to TOU tariffs is the fear they will lead to winners and losers and that they may be regressive or affect certain sectors of society more than others. Here we explore these issues by taking advantage of a unique data-set, the Household Electricity Survey (HES). We analyse the distributional effects of various revenue-neutral TOU tariffs which are designed to reflect the true cost of meeting electricity demand. We perform this welfare analysis under both the assumptions of no demand response and demand response respectively