Compressed air energy storage with waste heat export: An Alberta case study

Interest in compressed air energy storage (CAES) technology has been renewed driven by the need to manage variability form rapidly growing wind and solar capacity. Distributed CAES (D-CAES) design aims to improve the efficiency of conventional CAES through locating the compressor near concentrated heating loads so capturing additional revenue through sales of compression waste heat. A pipeline transports compressed air to the storage facility and expander, co-located at some distance from the compressor. The economics of CAES are strongly dependant on electricity and gas markets in which they are embedded. As a case study, we evaluated the economics of two hypothetical merchant CAES and D-CAES facilities performing energy arbitrage in Alberta, Canada using market data from 2002 to 2011. The annual profit of the D-CAES plant was $1.3 million more on average at a distance of 50 km between the heat load and air storage sites. Superior economic and environmental performance of D-CAES led to a negative abatement cost of À$40/tCO 2 e. We performed a suite of sensitivity analyses to evaluate the impact of size of heat load, size of air storage, ratio of expander to compressor size, and length of pipeline on the economic feasibility of D-CAES. Electric system operators dispatch the generation fleet in response to fluctuations in the load and to ensure grid reliability. Baseload power plants are characterized with low marginal costs, low ramp rates and high start up costs. Such inherent properties can lead to their part-load and less efficient operation and also depressed electricity prices during periods of low demand. On the other hand, peaking plants have low start up costs, fast dispatch, and high fuel costs. The variations in load and technical characteristics of the generation fleet cause fluctuations in electricity prices as well as inefficient and more polluting operation of the electricity sector. Penetration of intermittent renewable energies into the electric grid could worsen the volatility of prices. Low marginal cost of wind and solar-based electricity would depress price of off-peak electricity [1]. At the same time, forecast errors, uncertainty , and rapid changes in the output of these plants could increase the price of peak electricity [2,3]. Price volatility of electricity is a business opportunity for energy arbitrage by energy storage plants. In addition to direct financial gains for the plant itself, an energy storage unit may benefit the electric system (positive externalities) in numerous ways such as increasing the …