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The Integrated Single Electricity Market (I-SEM) is the proposed wholesale electricity market for Ireland and it is intended to replace the current Single Electricity Market (SEM) by 2018. Subsequently, substantial modifications will be required to the SEM and this has led to significant uncertainty for stakeholders. The SEM currently features no forecast risk for renewables such as wind and there is no concept of balance responsibility. Under the I-SEM, wind generation will be exposed to forecast risk and the requirement to be balance responsible. The use of Compressed Air Energy Storage (CAES) could represent a better system configuration which would reduce the reliance on expensive generation for system balancing and reduce the financial risk to wind generation. Thus, the aim of this research was to estimate the economic performance of wind generation with and without CAES from a private investor’s perspective in the I-SEM. More specifically, the Balancing Mechanism (BM) System Marginal Prices (SMPs), total generation costs and CO2 emissions were estimated from a systems perspective under the I-SEM. The approach was to quantify the SMPs, total generation costs and CO2 emissions for each scenario using a validated unit commitment and economic dispatch PLEXOS model of the Irish and British electricity markets under the I-SEM structure. The private Net Present Value of wind generation was then evaluated using the collected financial and technical project data and the electricity price and generation outputs from the I-SEM model for each scenario. The economic viability of CAES from a systems perspective was then assessed using techno-economic data for the CAES plant and outputs from the I-SEM model. Results revealed that the SMPs increase between the day-ahead and BM markets for the both scenarios. Moreover, the SMPs are most sensitive to the fuel and carbon prices, while the remaining input parameters have a more modest impact. A comparison of the total generation costs revealed that the inclusion of the CAES plant in the I-SEM led to savings of €8 million over the year 2020. The CO2 emissions were estimated for each scenario and a modest emissions increase of 1% (0.1 MtCO2) between the BAU and BAU+CAES scenarios occurred due to the addition of the CAES plant. The NPV of wind generation was estimated as €1.91bn and €2.01bn for the BAU and BAU+CAES scenarios, respectively. The CAES plant receives a positive net revenue of €21.6 million over the year and is considered economically viable given that it recovers it costs from the revenue of selling energy to the I-SEM.
Cleary, B. (2016) A Techno-Economic Analysis of Wind Generation in Conjunction with Compressed Air Energy Storage in the Integrated Single Electricity Market. Doctoral Thesis, Technological University Dublin, doi:10.21427/D7SS3D