Optimal operation strategies of compressed air energy storage (CAES) on electricity spot markets with fluctuating prices

By Henrik Lund, G. Salgi, Brian Elmegaard, Anders N. Andersen. 2009

292 citations recorded by the source corpus.

Compressed air energy storage (CAES) technologies can be used for load levelling in the electricity supply and are therefore often considered for future energy systems with a high share of fluctuating renewable energy sources, such as e.g. wind power. In such systems, CAES plants will often operate on electricity spot markets by storing energy when electricity prices are low and producing electricity when prices are high. In order to make a profit on such markets, CAES plant operators have to identify proper strategies to decide when to sell and when to buy electricity. This paper describes three independent computer-based methodologies which may be used for identifying the optimal operation strategy for a given CAES plant, on a given spot market and in a given year. The optimal strategy is identified as the one which provides the best business-economic net earnings for the plant. In practice, CAES plants will not be able to achieve such optimal operation, since the fluctuations of spot market prices in the coming hours and days are not known. Consequently, two simple practical strategies have been identified and compared to the results of the optimal strategy. This comparison shows that, in practice, a CAES plant can be expected to earn 80-90 per cent of the optimal earnings.

Subfields: Electrical and Electronic Engineering, Mechanical Engineering

View Paper: https://www.semanticscholar.org/paper/e86d4b995a6c6cda80b2e1aa0c5b014122848cb8

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Electrical and Electronic Engineering

In Mechanical Engineering

Citations in the corpus

Modeling of financial incentives for investments in energy storage systems that promote the large-scale integration of wind energy (2013, background): “Finally, flexibility of such systems to serve as both base load plants [53] and peak following units [54] is thought to provide considerable opportunities for the improved management of wind energy generation [55].”
The value of compressed air energy storage in energy and reserve markets (2011, unknown): “CAES arbitrage revenues from U.S. studies are generally higher than those found in several European studies focusing on electricity markets in Denmark [6] [19].”
Market and Policy Barriers to Deployment of Energy Storage (2012, methodology): “While storage investment in a regulated market only requires a utility to demonstrate that it is prudent, Narayanamurti et al. (2011) note that there is a lack of incentives in regulated markets for deploying new technologies.”
A review of computer tools for analysing the integration of renewable energy into various energy systems (2010, methodology): “To date energyPRO has been used to analyse CHP plants participating in the spot market or selling electricity at fixed tariffs [108], to simulate compressed-air energy storage in the spot market [103], to analyse CHP plants instead of boilers on district-heating networks [109], and to identify the o”
A MILP model for optimising multi-service portfolios of distributed energy storage (2015, background): “Ability of storage systems to support energy market operations by shifting peak demand and thus improving load factors to reduce cost of energy production, has been widely reported in the literature [1-3].”
Maximising the value of electricity storage (2016, methodology): “Lund shows that this arrives at the global optimum for profit [2], which we confirmed using a simple linear program written in GAMS.”
Practical operation strategies for pumped hydroelectric energy storage (PHES) utilising electricity price arbitrage (2011, background): “Lund and Salgi (2009) along with Lund et al. (2009) analysed various operating strategies and the corresponding profits from a compressed air energy storage on the Danish electricity market, Kazempour et al. (2009a) created a scheduling tool for a group of hydro plants supplemented by a PHES…”
Energy system analysis of marginal electricity supply in consequential LCA (2010, background): “of waste (Munster 2007), electric boilers, heat pumps, fuel cells, hydrogen storage (Blarke and Lund 2007 )a nd compressed air energy storage ( Lund et al. 2009; Salgi and Lund 2008).”