Several specific subsidies could enhance the economic viability of Liquid Air Energy Storage (LAES) systems based on recent research and analyses:
Capital Expense Subsidies
Subsidies focused on reducing the upfront capital expenses (CAPEX) for LAES projects could significantly improve their financial attractiveness. Sensitivity analyses from MIT and other studies have shown that capital expense subsidies make LAES economically viable in many locations by lowering the initial investment barrier.
Discharge Subsidies
Subsidies that provide payments per unit of electricity discharged from the LAES system can accelerate investment decisions and improve profitability. For example, a discharge subsidy of about $0.133/kWh was found to make investors act promptly in certain regions, thus advancing project deployment timelines by at least a year.
Preferential Taxation Policies
Tax incentives such as preferential tax treatment can increase the investment value of LAES systems. These policies are especially effective in areas with high electricity price volatility (peak-valley price differences), which offer greater arbitrage opportunities for energy storage.
Policy Support for Long-Duration Storage
Targeted policies promoting longer-duration energy storage, such as weekly rather than monthly capacity, can improve cost efficiency and economic returns.
Contextual Considerations
- Regions with high electricity demand and abundant renewable resources (e.g., Texas and Florida) stand to benefit most from these subsidies because LAES can leverage renewable surplus power and participate actively in wholesale electricity markets.
- Ensuring adequate electricity price volatility and market structures that reward grid services is also critical to realizing the economic potential of LAES.
In summary, capital expense subsidies, discharge subsidies, and preferential taxation are key financial incentives that could drive the economic viability of LAES, especially when combined with favorable regional energy market conditions and policies supporting decarbonization and renewable integration.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-specific-subsidies-could-enhance-the-economic-viability-of-laes/
