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Economics of compressed air energy storage to integrate wind power: A case study in ERCOT

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  • Fertig, Emily
  • Apt, Jay

Abstract

Compressed air energy storage (CAES) could be paired with a wind farm to provide firm, dispatchable baseload power, or serve as a peaking plant and capture upswings in electricity prices. We present a firm-level engineering-economic analysis of a wind/CAES system with a wind farm in central Texas, load in either Dallas or Houston, and a CAES plant whose location is profit-optimized. With 2008 hourly prices and load in Houston, the economically optimal CAES expander capacity is unrealistically large - 24Â GW - and dispatches for only a few hours per week when prices are highest; a price cap and capacity payment likewise results in a large (17Â GW) profit-maximizing CAES expander. Under all other scenarios considered the CAES plant is unprofitable. Using 2008 data, a baseload wind/CAES system is less profitable than a natural gas combined cycle (NGCC) plant at carbon prices less than $56/tCO2 ($15/MMBTU gas) to $230/tCO2 ($5/MMBTU gas). Entering regulation markets raises profit only slightly. Social benefits of CAES paired with wind include avoided construction of new generation capacity, improved air quality during peak times, and increased economic surplus, but may not outweigh the private cost of the CAES system nor justify a subsidy.

Suggested Citation

  • Fertig, Emily & Apt, Jay, 2011. "Economics of compressed air energy storage to integrate wind power: A case study in ERCOT," Energy Policy, Elsevier, vol. 39(5), pages 2330-2342, May.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:5:p:2330-2342
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    References listed on IDEAS

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    Cited by:

    1. Capuder, Tomislav & Pandžić, Hrvoje & Kuzle, Igor & Škrlec, Davor, 2013. "Specifics of integration of wind power plants into the Croatian transmission network," Applied Energy, Elsevier, vol. 101(C), pages 142-150.
    2. repec:eee:appene:v:201:y:2017:i:c:p:148-157 is not listed on IDEAS
    3. Foley, A. & Díaz Lobera, I., 2013. "Impacts of compressed air energy storage plant on an electricity market with a large renewable energy portfolio," Energy, Elsevier, vol. 57(C), pages 85-94.
    4. repec:gam:jeners:v:11:y:2018:i:3:p:591-:d:135330 is not listed on IDEAS
    5. Zakeri, Behnam & Syri, Sanna, 2015. "Electrical energy storage systems: A comparative life cycle cost analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 569-596.
    6. Mason, James E. & Archer, Cristina L., 2012. "Baseload electricity from wind via compressed air energy storage (CAES)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(2), pages 1099-1109.
    7. Alami, Abdul Hai & Aokal, Kamilia & Abed, Jehad & Alhemyari, Mohammad, 2017. "Low pressure, modular compressed air energy storage (CAES) system for wind energy storage applications," Renewable Energy, Elsevier, vol. 106(C), pages 201-211.
    8. Aidan Tuohy & Ben Kaun & Robert Entriken, 2014. "Storage and demand-side options for integrating wind power," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 3(1), pages 93-109, January.
    9. Yang Gu & James McCalley & Ming Ni & Rui Bo, 2013. "Economic Modeling of Compressed Air Energy Storage," Energies, MDPI, Open Access Journal, vol. 6(4), pages 1-21, April.
    10. Safaei, Hossein & Keith, David W. & Hugo, Ronald J., 2013. "Compressed air energy storage (CAES) with compressors distributed at heat loads to enable waste heat utilization," Applied Energy, Elsevier, vol. 103(C), pages 165-179.
    11. Rahimi, Ehsan & Rabiee, Abdorreza & Aghaei, Jamshid & Muttaqi, Kashem M. & Esmaeel Nezhad, Ali, 2013. "On the management of wind power intermittency," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 643-653.
    12. Lamy, Julian & Azevedo, Inês L. & Jaramillo, Paulina, 2014. "The role of energy storage in accessing remote wind resources in the Midwest," Energy Policy, Elsevier, vol. 68(C), pages 123-131.
    13. Madlener, Reinhard & Latz, Jochen, 2013. "Economics of centralized and decentralized compressed air energy storage for enhanced grid integration of wind power," Applied Energy, Elsevier, vol. 101(C), pages 299-309.
    14. Abdo, Rodrigo F. & Pedro, Hugo T.C. & Koury, Ricardo N.N. & Machado, Luiz & Coimbra, Carlos F.M. & Porto, Matheus P., 2015. "Performance evaluation of various cryogenic energy storage systems," Energy, Elsevier, vol. 90(P1), pages 1024-1032.
    15. Zhang, Yuan & Yang, Ke & Li, Xuemei & Xu, Jianzhong, 2014. "Thermodynamic analysis of energy conversion and transfer in hybrid system consisting of wind turbine and advanced adiabatic compressed air energy storage," Energy, Elsevier, vol. 77(C), pages 460-477.
    16. Venkataramani, Gayathri & Parankusam, Prasanna & Ramalingam, Velraj & Wang, Jihong, 2016. "A review on compressed air energy storage – A pathway for smart grid and polygeneration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 895-907.
    17. Briola, Stefano & Di Marco, Paolo & Gabbrielli, Roberto & Riccardi, Juri, 2016. "A novel mathematical model for the performance assessment of diabatic compressed air energy storage systems including the turbomachinery characteristic curves," Applied Energy, Elsevier, vol. 178(C), pages 758-772.
    18. Mauch, Brandon & Carvalho, Pedro M.S. & Apt, Jay, 2012. "Can a wind farm with CAES survive in the day-ahead market?," Energy Policy, Elsevier, vol. 48(C), pages 584-593.
    19. Noel, Lance & McCormack, Regina, 2014. "A cost benefit analysis of a V2G-capable electric school bus compared to a traditional diesel school bus," Applied Energy, Elsevier, vol. 126(C), pages 246-255.
    20. Kondziella, Hendrik & Bruckner, Thomas, 2016. "Flexibility requirements of renewable energy based electricity systems – a review of research results and methodologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 10-22.
    21. Johnson, Jeremiah X. & De Kleine, Robert & Keoleian, Gregory A., 2014. "Assessment of energy storage for transmission-constrained wind," Applied Energy, Elsevier, vol. 124(C), pages 377-388.
    22. repec:eee:appene:v:206:y:2017:i:c:p:1552-1563 is not listed on IDEAS
    23. Wadim Strielkowski & Evgeny Lisin, 2017. "Economic Aspects of Innovations in Energy Storage," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 62-66.
    24. repec:gam:jeners:v:10:y:2017:i:7:p:991-:d:104584 is not listed on IDEAS

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