"Economics of Compressed Air Energy Storage to Integrate Wind
Power: A Case Study in ERCOT"
Emily Fertig and Jay Apt
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 Houston, and a CAES plant whose location is
profit-optimized. Transmission and CAES capacities are optimized under
three electricity price scenarios. Using 2008 hourly prices, the
economically optimal CAES expander capacity is unrealistically large - 20
GW - and dispatches for only a few hours per week when prices are highest.
A $300/MWh price cap and contract price each render the wind/CAES system
unprofitable. A baseload wind/CAES system is less profitable than a
natural gas combined cycle (NGCC) plant at carbon prices less than
$130/tCO2 (2008 data) to $300/tCO2 (2009 data). Using the wind/CAES system
in regulation markets as well as the balancing energy market raises profit
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.
PDF's are password protected. If you're a
first-time visitor and need a password, please click