ECONOMIC FEASIBILITY OF COMPRESSED AIR ENERGY STORAGE: PORTUGUESE PRE-SELECTED CASE STUDIES

Abstract

New challenges arise with the increasing integration of renewable energies into the energy grid. One of the possible solutions for challenges such as balancing supply and demand, or the adequacy of power, may be energy storage, which can perform a vital role in future grids. Compressed air energy storage (CAES) is a large-scale energy storage system with long-term capacity for utility applications. This study evaluates the economic feasibility of CAES pre-selected reservoirs case studies for the Portuguese electricity system. It analyzes several scenarios for each case study and assesses two business models: one for the storage of excess renewables and another for energy arbitrage. The novelty of this work is the investment assessment approach using a Monte Carlo Simulation (MCS) methodology applied to CAES, taking into account several uncertainties associated with a CAES project. The financial indicators assessed include Net Present Value (NPV), Internal Rate of Return (IRR), Discounted Payback period, and Levelized Cost of Energy (LCOE). The results suggest a better performance from the CAES RES business model than the CAES arbitrage business model. Furthermore, the diabatic CAES assessed scenarios seem to have more attractive results than their equivalent adiabatic CAES systems in the CAES RES business model.