Economic Modeling of Compressed Air Energy Storage

Yang Gu, James McCalley, Ming Ni and Rui Bo
Additional contact information
Yang Gu: Midwest Independent Transmission System Operator (MISO), Inc., St. Paul, MN 55108, USA
James McCalley: Department of Electrical and Computer Engineering, Iowa State University, Ames, IA 50010, USA
Ming Ni: State Grid Electric Power Research Institute, Nanjing, Jiangsu 210000, China
Rui Bo: Midwest Independent Transmission System Operator (MISO), Inc., St. Paul, MN 55108, USA

Energies, 2013, vol. 6, issue 4, 1-21

Abstract: Due to the variable nature of wind resources, the increasing penetration level of wind power will have a significant impact on the operation and planning of the electric power system. Energy storage systems are considered an effective way to compensate for the variability of wind generation. This paper presents a detailed production cost simulation model to evaluate the economic value of compressed air energy storage (CAES) in systems with large-scale wind power generation. The co-optimization of energy and ancillary services markets is implemented in order to analyze the impacts of CAES, not only on energy supply, but also on system operating reserves. Both hourly and 5-minute simulations are considered to capture the economic performance of CAES in the day-ahead (DA) and real-time (RT) markets. The generalized network flow formulation is used to model the characteristics of CAES in detail. The proposed model is applied on a modified IEEE 24-bus reliability test system. The numerical example shows that besides the economic benefits gained through energy arbitrage in the DA market, CAES can also generate significant profits by providing reserves, compensating for wind forecast errors and intra-hour fluctuation, and participating in the RT market.

Keywords: co-optimization; compressed air energy storage; economic dispatch; wind energy; unit commitment (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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