Economies of Scope for Electricity Storage and Variable Renewables

In this paper, we investigate whether and under which conditions jointly owning a variable renewable source of electricity (VRES) an storage generates economies scope in competitive markets. Using simple stochastic optimization model that assumes frictionless markets, analytically show no economic benefit arises from combining the two assets. This finding is contradiction to large parts literature, claim it interest owners VRES additionally own storage. We also identify circumstances where our argument does not hold combination could theoretically make sense on level individual agents. last part demonstrate numerical case study German market even cases theoretical results do hold, tying together may produce suboptimal results.