Power plant owners are blocking new battery companies from the market just by messing with prices to make storage look unprofitable.
SSRN · March 17, 2026 · 6428758
The Takeaway
While it is assumed that energy storage (like large-scale batteries) will naturally thrive in volatile markets, this paper shows that incumbent producers can strategically swing prices between highs and lows to 'preempt' storage. By manipulating the marginal cost of storage through pricing alone, incumbents can block new green technology without needing regulation or physical barriers.
From the abstract
We study a game with a finite number of incumbent producers and a new agent that is storage; storage must buy to sell. We construct a novel equilibrium that is payoff-maximizing for the incumbents, in which they cooperate to prevent storage from operating even absent entry costs. Two kinds of deviations must be deterred: deviations by producers and deviations by storage. The producers achieve cooperation through the threat of Nash reversion and pre-empt operation of the storage unit with the thr