The cost of compressed air energy storage (CAES) can significantly impact the overall cost of electricity due to several factors:
Cost Components of CAES
- Construction Costs: The capital expenditure (capex) for CAES facilities is typically around $1,350/kW. This upfront cost impacts the overall energy storage cost per kilowatt-hour.
- Energy Efficiency: CAES systems have relatively low round-trip efficiencies, typically ranging from 40% to 63%. This inefficiency increases the amount of input electricity needed, which raises costs.
- Operating Costs: High maintenance costs due to moving parts and the use of natural gas for heating the air during discharge contribute to operational expenses.
- Geographical Constraints: The need for suitable underground storage sites, like salt caverns, limits where CAES can be economically viable.
Cost Impact on Electricity
- Storage Spread Required: To achieve a 10% internal rate of return (IRR), CAES requires a storage spread of about 26 cents/kWh. This spread reflects the difference between the cost of electricity when charging and discharging.
- Comparison with Other Technologies: While CAES can offer competitive costs for long-duration storage, its higher maintenance and efficiency losses make it less favorable than some alternatives like lithium-ion batteries for shorter durations.
- Prospects for Cost Reduction: Innovation and economies of scale could potentially reduce CAES costs, making it more viable for grid-scale power balancing.
Overall Impacts
The cost of CAES impacts electricity costs by increasing the overall system cost due to its capital investment, operational inefficiencies, and geographical limitations. However, CAES remains a viable option for long-duration storage, especially when integrated with renewable energy systems to stabilize power grids.
For example, studies suggest that with optimized conditions and high renewable energy penetration, CAES could offer costs as low as $0.123/kWh, making it competitive for long-term storage needs. Despite these advantages, the technology faces hurdles that need to be addressed to become more economical and widespread.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-cost-of-compressed-air-storage-impact-the-overall-cost-of-electricity/
