Energy Storage Investment and Operation in Efficient Electric Power Systems

Cristian Junge, Dharik Mallapragada, Richard Schmalensee

Research output: Contribution to journalArticlepeer-review


We consider welfare-optimal investment in and operation of electric power systems with constant returns to scale in multiple available generation and storage technologies under perfect foresight. We extend a number of classic results on generation, derive conditions for investment and operations of storage technologies described by seven cost/performance parameters, and develop insights on power systems with multiple storage technologies. Simulation of a deeply decar-bonized “Texas-like” power system with two available storage technologies shows both the non-existence of simple “merit-order” rules for storage operation and the value of frequency domain analysis to describe efficient operation. Our analysis points to the critical role of the capital cost of energy storage capacity in influenc-ing efficient storage investment and operation.

Original languageEnglish (US)
Pages (from-to)1-24
Number of pages24
JournalEnergy Journal
Issue number6
StatePublished - 2022


  • Efficiency
  • Electricity
  • Optimality
  • Storage

ASJC Scopus subject areas

  • Economics and Econometrics
  • General Energy


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