Impact of Energy Storage Technology Progress on Renewable Investment: A Cournot Game Approach with Policy Implications

The global energy transition has accelerated the integration of renewable energy sources (RES), posing challenges for grid stability and investment strategies. While existing research focuses on technical aspects like system planning and uncertainty management, few studies systematically analyze RES investment behavior in market environments, particularly with advancing energy storage (ESS) technologies. This paper fills this gap by developing a Cournot-type electricity market model to examine how ESS cost reductions influence RES investments. Using a non-cooperative game theory framework, and simplifying the Nash equilibrium seeking process with potential game theory, we demonstrate that declining ESS costs incentivize higher RES investments, especially when RES investors co-own ESS. Numerical simulations further reveal that the level of simultaneity between load and renewable power generation affects investments greatly. The findings offer insights for policymakers and market participants navigating the interplay between storage technology and renewable energy expansion.