Carbon-free Electricity Supply in a Cournot Wholesale Market: Israel
构建两阶段模型分析光伏加电池与燃气轮机在古诺批发电力市场中的竞争，发现电池成本降至燃气轮机容量成本约24%时，光伏加电池企业将取代燃气轮机企业，实现市场驱动的无碳电力供应。
We develop a two-stage model to analyze a Cournot wholesale electricity market in which competing firms use photovoltaics augmented with batteries (PVB) or combined cycle gas turbines (CCGTs) to meet time-varying demands. Capturing the complex interactions of output and investment decisions made by multiple profit-maximizing PVB and CCGT firms, our model yields the market’s long-run equilibrium of capacity mix and short-run equilibrium of electricity generation and price levels. Accounting for the sun’s irradiation that determines solar generation level, our model computes the battery cost reduction necessary for batteries entering the optimal capacity mix. Using Israel as a case study, we show how declining battery cost may cause PVB firms to displace CCGT firms, resulting in carbon-free electricity supply as a market-based outcome. The battery cost threshold initiating this outcome is ~24% of CCGT’s capacity cost, implying that natural gas is a transitional fuel in Israel’s pathway to deep decarbonization.