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Economic Feasibility of a Compressed Air Energy Storage System under Market Uncertainty : A Real Options Approach

Hammann, Eide; Madlener, Reinhard; Hilgers, Christoph ORCID iD icon 1
1 Institut für Angewandte Geowissenschaften (AGW), Karlsruher Institut für Technologie (KIT)


Since the liberalization of electricity markets power prices are considered as highly volatile. Thus investment in new power plants is exposed to higher risks. Traditional capital budgeting methods lack the integration of flexibility. This can be overcome by applying real options analysis. In the context of an increasing electricity production by highly volatile renewable power plants, new solutions need to be found to ensure security of supply and to accommodate intermittent generation. Energy storage is seen as a possible solution. The Compressed Air Energy Storage (CAES) technology provides many key features that are relevant to deal with arising problems by renewables. Lately an advanced adiabatic version with higher roundtrip efficiencies has been discussed. However, high capital expenditures limit the economically viable implementation. As conventional CAES uses natural gas for production, it is exposed to price fluctuations on two markets. Depending on the configuration of component sizes, CAES storage units can be used for different purposes. A price model is set up to produce, in combination with the application of a Monte Carlo simulation, possible future price paths for power, natural gas and demand rate for minute reserve. ... mehr

Verlagsausgabe §
DOI: 10.5445/IR/1000071410
Veröffentlicht am 03.04.2018
DOI: 10.1016/j.egypro.2017.03.888
Zitationen: 11
Zitationen: 26
Cover der Publikation
Zugehörige Institution(en) am KIT Institut für Angewandte Geowissenschaften (AGW)
KIT-Zentrum Klima und Umwelt (ZKU)
Publikationstyp Zeitschriftenaufsatz
Publikationsjahr 2017
Sprache Englisch
Identifikator ISSN: 1876-6102
KITopen-ID: 1000071410
HGF-Programm 35.14.01 (POF III, LK 01) Effiziente Nutzung geothermisch. Energie
Erschienen in Energy procedia
Verlag Elsevier
Band 105
Seiten 3798-3805
Bemerkung zur Veröffentlichung The 8th International Conference on Applied Energy (ICAE 2016)
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