Large Scale Impacts – Economic Feasibility
Mid-Scale CAES is most feasible if it is implemented on privately owned land for large industrial buildings, hospitals, and schools. Based on an economic analysis using energy cost data from California and New York, CAES systems would generate $37,000,000 or $41,000,000 over a thirty year period respectively. The team of chemical engineers evaluated the lifetime cost of the system which includes both installation and operation costs. They used data averaging costs of pressure vessels, heat exchangers, and expansion systems from 1998. The textbook Product and Process Design Principles: Synthesis, Analysis, and Evaluation fits equations to data collected in 1998 so that we can estimate the costs and use inflation calculations to figure out the cost in 2022.
Methods for Economic Analysis
Efficiency values of CAES were calculated using a model system developed by a team of mechanical engineers. The CAES was built at a smaller scale and is analyzed at a larger scale using non-dimensionalized parameters. It should be noted that various subsystem components can have better performance at a larger scale so these calculations are conservative.
Economic analysis methods were followed from the Product and Process Design Principles: Synthesis, Analysis, and Evaluation textbook. This includes evaluating assets and liabilities of the CAES design. This is the first part of the economic analysis.
The second part of this analysis focuses on the implementation of the system geographically. Since the system is a mid-scale system, it needs to be placed within communities off of the sites of electric power plants. Grid operators need to have an incentive to purchase the mid-scale CAES system since they are ultimately the ones who will benefit from the revenue generated by the system. It is also common for grid operators to incentivize end-users to purchase these types of systems. Such incentives have been seen with smart thermostats. For example, Energy Star provided an $80 bill credit for end consumers who purchased a WiFi controlled thermostat (“ENERGY STAR® Smart WiFi Thermostat Incentive Program (BYOT) | FAYPWC.COM : FAYPWC.COM”). PG&E similarly offered a $120 rebate for any end consumer that purchased an eligible WiFi connected thermostat (“Smart thermostat rebate”). This part of the analysis looks into the question of how to incentivize grid operators and achieve buy-in from community members.
The team of chemical engineers focused on the cost structure of energy specifically at Lafayette College. Energy in the Lehigh Valley of Pennsylvania is relatively cheap so it is difficult to generate a large profit even if the cost of electricity doubles or triples at certain times of the day. The analysis examined the cost structures of installing and maintaining a CAES system scaled to power the entirety of Lafayette College. The system would be stored in the Bushkill parking lot of the campus. The costs of the CAES system were calculated using equations modeled to normalized distributions of pressure vessels, heat exchangers, and HVAC systems from 1998 data (Seider et al. Ch. 16). Using the institution’s energy costs from 2021, the team determined an optimal charging and discharging strategy to minimize total energy costs.
Energy cost structures vary across states because states have different policies and grid operators. This analysis focuses on Southern California Edison and Consolidated Edison Co-NY where energy is more expensive than in the Lehigh Valley and there are more drastic pricing differences throughout the day. Energy data came from Open EI. California and New York were chosen since they are leading states in energy innovation and have more renewable energy that is being integrated into their grids. Their cost structures that need to be passed by policymakers also have larger differences throughout the day to incentivize consumers to use energy at off-peak times. The same CAES system is analyzed with these different cost structures to analyze the economic feasibility of mid-scale CAES as an energy storage system.