Compressed Air Energy Storage Models for Energy Arbitrage and Ancillary Services: Comparison Using Mixed Integer Programming Optimization with Market Data from the Irish Power System

Abstract

AbstractA mixed integer linear programming (MIP) model is developed to simulate the dynamic performance of compressed air energy storage (CAES) systems in electricity grids composed of thermoelectric and wind energy generators. The model is termed thermo‐economic (TE) as it uses power curves from CAES manufacturers to simulate the effect of cavern pressure on the operation limits of the compressor and the expander of CAES plants. Here, the TE model and the fixed efficiency (FE) model are tested in a study of the economic potential of CAES for arbitrage and ancillary services in the Irish power system. The two models are compared by simulating the technical and economic performance of CAES under deregulated market conditions. Data from the Irish power system are used and both models are applied to various system specifications and market scenarios, while optimizing the operation of CAES for provision of energy arbitrage and ancillary services. The results show that the TE model returns 15 % to 30 % less profits than the FE one, thus demonstrating that FE models overestimate CAES profitability. This study shows that arbitrage using CAES may not be profitable with current prices in Ireland. However, CAES operation would become profitable if financial mechanisms that capture the important system‐wide benefits of CAES are put in place.