Waste Heat Recovery: A risk management strategy for wind farms and compressed energy storage plants

Risk management strategies are crucial to improve economic attractiveness of intermittent renewables. Large scale integration of these variable sources without proper contingency measures is a reliability concern for grid operators. Here, we use a two-stage stochastic optimization model in order to evaluate economic attractiveness of two bulk energy storage technologies to a risk averse wind farm operator participating in a hypothetical day-ahead market. Conventional compressed air energy storage (CAES) and a variation of CAES called D-CAES which earns extra revenues through sales of otherwise wasted heat of compression are used as storage technologies. In this case study, standalone wind recovered only 54% of its annual costs (capital and fixed operating and maintenance) while both CAES plants provided 10% return on investment. Imbalance penalties were 50% lower for D-CAES compared to CAES.