The Visiting Speaker Series is an opportunity for invited researchers and professionals, external to the University of Guelph, to present their research topic(s) to faculty and students. On February 3, the Department of Economics and Finance will welcome Afzal Siddiqui  from HEC Montreal. Anyone from the University of Guelph is welcome to attend.

Abstract: Deregulation of the electricity industry creates opportunities for storage investment, which could be conducted by both an independent system operator (ISO) and a merchant. While the former is a regulated entity that would undertake welfare-maximising decisions, the latter is motivated solely by temporal arbitrage opportunities via storage operations. We develop a bi-level programming model of an imperfectly competitive electricity industry with electricity generation and storage operations at the lower level and storage investment at the upper level. Our analytical results demonstrate that a relatively high (low) amount of market power by generators leads to low (high) storage capacity adoption by the merchant relative to the ISO. Using a charge on generation ramping between off-peak and peak periods, we illustrate how to incentivise socially optimal storage investment with a merchant.