Graduation Year
2025
Date of Submission
4-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Yong Kim
Terms of Use & License Information
Rights Information
2025 Hannah Vestring
Abstract
As renewable energy penetration increases, driven largely by solar, electricity prices have become increasingly volatile due to the intermittency of supply, increasing the need for price stabilizing interventions. This study examines the impact of cumulative additions of utility-scale battery energy storage systems (BESS) capacity on real-time market (RTM) electricity price volatility within the California Independent System Operator (CAISO) between 2020 and 2024, taking a long-term, system-wide perspective on storage deployment. Using an Ordinary Least Squares (OLS) regression framework, the analysis finds that cumulative BESS capacity is significantly associated with reduced price volatility in the benchmark model, with results remaining robust across multiple specifications.
Notably, the study finds that the interaction between cumulative BESS and natural gas prices is consistently positive and significant, suggesting that storage is more effective at mitigating volatility when gas prices are low. These results imply that BESS may not be effectively reducing volatility stemming from external factors such as gas price shocks and may primarily target volatility caused by renewable intermittency. As a result, BESS may not be fully capitalizing on available price arbitrage opportunities on the grid, highlighting the importance of considering fuel price dynamics when evaluating BESS performance.
Recommended Citation
Vestring, Hannah, "Batteries for Grid Stability: The Impact of Utility-Scale Battery Installation on Electricity Price Volatility in California" (2025). CMC Senior Theses. 3934.
https://scholarship.claremont.edu/cmc_theses/3934
