A study of licensing strategies for energy storage technologies in the renewable electricity supply chain under government subsidies

With the rapid spread of renewable electricity, the licensing of energy storage technology has become an important way for technologically backward electricity suppliers to improve their competitiveness in the electricity market. However, there have been few studies that have investigated the influence of government policy on the selection of licensing strategies for energy storage technologies by renewable electricity suppliers. Consequently, we constructed a game model involving two competing renewable electricity suppliers, the grid company, and the government. One of them is a technologically advanced electricity supplier, and the other is a technologically backward one. The model considers government subsidies and compares three licensing strategies: technology monopolies (TM), unit-production authorization (UA), and fixed-fee authorization (FA). Based on numerical analysis, this paper compares wholesale electricity prices, grid orders and grid and government profits under different licensing strategies. Next, the choice of the optimal licensing strategy among electricity suppliers and the preferences of the grid and the government for different licensing strategies are analyzed. The results show that wholesale electricity prices increase and grid orders decrease under the UA strategy compared to the TM strategy, while the opposite is true under the FA strategy. The FA strategy is preferred between electricity suppliers when the cost of generation from technologically advanced suppliers exceeds twice the cost of generation from technologically inferior suppliers. Otherwise, the UA strategy is more appropriate. Moreover, the grid and government preferred the FA strategy to the TM or UA strategy, with profits rising 89% and 26% for the grid and government respectively under this strategy. Lastly, the grid is more profitable under the UA strategy than under the TM strategy only if the level of electricity reliability and grid cost are higher. [Display omitted] •Quantifying the problem of energy storage technology diffusion in the renewable electricity sector with government subsidies.•Bertrand and Stackelberg competitions are established among the supply chain players.•The game equilbria are compared under three licensing strategies.•A technologically advanced electricity supplier’s choice of licensing strategy is related to its generation costs.•The preferences of the government and the grid for different licensing strategies are investigated.