Power system flexibility with electricity storage technologies: A technical–economic assessment of a large-scale storage facility

Abstract

This study analyzes power storage as a key option to support wind energy integration. The case study is the French power system, whose characteristics rely on high rates of nuclear power and a strong emerging wind energy market. A dynamic optimization dispatching model is used to simulate the operation of the power system, under two development scenarios of the technology mix by 2030, one scenario documented by European Commission, EC [1], and a second one by French Transmission System Operator, RTE [2]. Both scenarios result in power storage requirements of around 7TWh for more than 4GW installed storage capacity of pumped hydro power plants in France as a whole. In this context, it is assessed the profitability of an additional regional project of Compressed Air Energy Storage (CAES) located in the region of Bretagne. It shows how benefits could accrue by avoiding the regional wind curtailment of 59GWh, by providing ancillary services such as secondary reserve, and by increasing the use of grid assets and the nuclear power output with more than 230GWh. The profitability of the CAES project remains however negative, around −70€/MWh despite the social value and the system benefits that results in. The study assesses qualitatively possible ways to incentivize the investment in new storage projects, through for instance contracts for difference, which would link the storage operation, its investment cost and stage of development to the power market design via power prices and a pre-defined rate of return. The periodical revision of these regulatory arrangements would enable the storage investor to recover the investment cost and would eliminate the risk of over rewarding generators in the case of windfall profits.