Financial incentives could significantly enhance the economic viability of liquid air energy storage (LAES) systems, according to recent research and analyses:
- Capital Expenditure Subsidies: The most impactful financial incentive identified is substantial subsidies on capital costs of LAES installations. Studies show that providing subsidies between 40% and 60% on the upfront capital expenditure can turn the net present value (NPV) of LAES projects positive across various decarbonization and market scenarios. This means that such subsidies could make large-scale LAES investments financially attractive and encourage immediate technology adoption.
- Targeted Policy Support: Policies that target capital cost reduction through subsidies or grants can be implemented faster than technical improvements and can more effectively drive storage deployment. The sensitivity analyses indicate that financial incentives surpass efforts to increase energy efficiency in improving economic viability.
- Regional and Market-Specific Incentives: LAES economic feasibility also depends on regional market conditions and decarbonization goals. Providing incentives tailored to regions with favorable market structures (e.g., southern US markets like Texas and Florida) can unlock investment viability.
- Integration Incentives: Encouraging integration of LAES with existing power plants or industrial facilities may reduce overall costs and improve efficiency, further enhancing financial attractiveness alongside direct subsidies.
In essence, financial mechanisms—especially capital cost subsidies of 40-60%—are the most effective incentives to make LAES projects viable, enabling the technology to scale quickly in support of decarbonized energy grids. This finding aligns across several comprehensive studies and models evaluating various scenarios up to 2050.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-financial-incentives-could-make-liquid-air-energy-storage-more-viable/
