Applied Energy 88 (2011) 2755–2763

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Applied Energy
journal homepage: www.elsevier.com/locate/apenergy

Economic feasibility and optimisation of an energy storage system for Portland

Wind Farm (Victoria, Australia)
Mir-Akbar Hessami ⇑, David R. Bowly
Department of Mechanical and Aerospace Engineering, Monash University, Wellington Road, Clayton (Melbourne), Victoria 3800, Australia

a r t i c l e i n f o a b s t r a c t

Article history: This paper presents the details of a theoretical study of the economic advantages of using large-scale
Received 5 October 2010 energy storage to complement a wind farm in a base-load dominated electricity grid. A computer model
Received in revised form 25 November 2010 is developed which simulates the operation of several energy storage systems when used with the 190-
Accepted 3 December 2010
MW Portland Wind Farm (PWF) located in Portland, Victoria, Australia. A variety of operating strategies
Available online 19 February 2011
are compared with the results of a dynamic programming model which finds the maximum possible rev-
enue which a given system can generate for a set of input conditions. Three energy storage systems are
Keywords:
modelled and costed: Pumped Seawater Hydro Storage (PSHS), Compressed Air Energy Storage (CAES),
Wind power
Energy storage
and Thermal Energy Storage (TES). It is found that CAES is the most profitable storage medium, requiring
Economic feasibility a capital expenditure of A$140 M and generating a rate of return (ROR) of 15.4%. The ROR for PSHS was
Spot price analysis 9.6%, and for TES was 8.0%. Therefore, a significant investment opportunity exists for the installation of an
energy storage system in this wind farm. It is therefore highly recommended that CAES is investigated
further with the aim of introducing large-scale energy storage to PWF and other similar wind turbine
installations.
Crown Copyright Ó 2010 Published by Elsevier Ltd. All rights reserved.

1. Introduction
It is common knowledge among most scientists and engineers
that humans are living unsustainably. Governments and industry
worldwide have acknowledged that the increasing carbon dioxide
levels in the atmosphere are caused by human activity, and that
the constantly increasing magnitude of this emission will trigger
significant changes in the Earth’s climate. The consumption of
non-renewable fuels to provide energy is a major source of carbon
dioxide and other greenhouse gases which cause global warming
[1,2]. Electricity comprises a large portion of the energy utilised
by humanity, estimated at 12% in 2008, and expected to grow to
34% by 2025 [3]. In Australia, the largest increase in CO2 emissions
over the 1990–2007 period occurred in the stationary energy sec-
tor (an increase of almost 50%), and in 2007, stationary energy ac-
counted for 53.9% of national emissions [4]. As reported in [5],
Australia, among the OECD countries, is the largest emitter of
greenhouse gas per capita followed by USA and Canada with the
exclusion of Luxembourg which is considered to be reasonable as
its total emission has an insignificant impact on the global green-
house gas inventories. The per capita greenhouse gas emissions
in tonnes of CO2 equivalent for these countries in 2008 were
⇑ Corresponding author. Tel.: +61 3 9905 3562; fax: +61 3 9905 1825.
E-mail address: akbar.hessami@monash.edu (M.-A. Hessami).
18.478 (Australia), 18.376 (USA) and 16.530 (Canada) and 21.269
(Luxembourg). Australia’s Federal Government has acknowledged
this ranking and has invested in renewable energy to reduce the
country’s greenhouse gas emissions.
The vast growth in demand for electricity provides a significant
opportunity for engineers and scientists to acquire more power
from renewable sources. Growth in renewable energy is being en-
hanced by recent government initiatives. The European Union has
a target of 22% of total electricity production from renewable en-
ergy sources by 2010 [6]. California has increased its standard for
renewable resources from 20% by 2010 to 33% by 2020 [7]. The
Australian Federal Government has, very disappointingly, lagged
behind these initiatives. However, in 2001 the Mandatory Renew-
able Energy Target (MRET) scheme was introduced, and in 2007
the Federal Government committed to ensuring that 20% of Austra-
lia’s electricity supply comes from renewable energy sources by
2020. Legislation was passed in October 2009 to implement an ex-
panded National Renewable Energy Target, which should further
stimulate growth in renewable energies.
Wind power is currently one of the most popular and fast-
expanding sources of renewable energy. Current projections put
the average global growth of the industry at 24% pa for the next
5 years [8]. With large expanses of coastline available (character-
ised by reliably high speed, low turbulence winds), Australia has
excellent wind resources by world standards, and is in a good posi-

0306-2619/$ - see front matter Crown Copyright Ó 2010 Published by Elsevier Ltd. All rights reserved.
doi:10.1016/j.apenergy.2010.12.013
2756 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763
tion to expand its use of wind power [4]. Wind power is a truly
renewable resource, producing no greenhouse emissions during
its generation.
Like all energy sources, however, wind power has strengths and
weaknesses. One of the biggest drawbacks is that supply of wind is
inherently variable as it cannot provide ‘‘firm power’’ on its own
[9]. Essentially, while wind can be reliably forecast several days
in advance, it cannot be scheduled to meet grid demand. It is clas-
sified as ‘‘negative load’’ (or ‘‘non-dispatchable’’) by electricity reg-
ulators, not to be relied upon to meet demand at critical times.
In electricity grids with only small amounts of wind power gen-
eration, where the variability of wind cannot be ‘‘smoothed’’ by the
use of geographically separated wind farm locations, another gen-
eration source must be available in the grid to provide power in the
absence of wind. In the Victorian power grid, such sources take the
form of ‘‘spinning reserves’’ provided by gas turbines which oper-
ate very infrequently, at an enormous expense. Liu et al. [10] have
presented an analysis of increasing wind power in networks simi-
lar to that of Victoria, and have concluded that the required in-
crease in thermal generating capacity would severely restrict
such a project.
Electricity is bought and sold like any other commodity. As
such, its price depends on supply and demand. Power producers
submit bids at 5-min intervals – prices at which they are willing
to sell proportions of their available power. The regulator, Austra-
lian Energy Market Operator (AEMO), orders the bids, and sets the
price based on the highest bid which is required to meet the de-
mand of the grid at a given time (meeting demand in the most cost
efficient way). The power producers which bid below that level
must provide power to the grid. The average price over six consec-
utive 5-min intervals becomes the half-hour spot price; this is the
price paid to power producers for the power which they provide
over that half-hour period.
Victoria has an electricity grid which is dominated by base-load
thermal (coal fired) power stations. These stations run at very high
capacity factors, and cannot be throttled easily. To meet the high
demand caused by hot weather or other events, gas-fired peaking
plants are used. These peaking plants run at capacity factors on
the order of 2% [11], and as such, demand very high prices for
the power they produce. This makes the spot price in Victoria
highly variable; prices can vary by several orders of magnitude
for small changes in demand.
These market conditions create a significant opportunity. If the
output characteristics of a wind farm could be modified such that
the energy is provided to the grid at times of high demand, rather
than relying on wind, less peaking power stations would be re-
quired, and the wind farm would become more profitable.
Energy storage provides the ability to store power generated by
wind turbines at times of low demand, and release that energy at
times of high demand. This is clearly advantageous to the power
grid, and it also provides an economic incentive: wind power gen-
erators receive higher revenues by providing power to the electric-
ity market when the spot price is high, as illustrated in Fig. 1. A
wind farm with energy storage can be classified as a ‘‘partially dis-
patchable’’ source because of its ability to respond to most situa-
tions of high demand.
Large-scale energy storage is currently not in widespread use
because the centralised nature of traditional electricity production
does not require it. Today, storage capacity worldwide is the equiv-
alent of about 90 GW of a total production of 3400 GW, or roughly
2.6% [3]. However, many storage options have been commercially
proven or investigated in the academic literature. Therefore, en-
ergy storage can ameliorate a wind farm’s inherent variability,
and it can provide the ability to store power generated by wind
turbines at times of low demand, and release that energy at times
of high demand. Wind power operators receive higher revenues by
providing power to the grid during the peak demand periods when
electricity spot price is high.
Therefore, this study investigates the economic viability of
using an energy storage system with Portland Wind Farms (PWF)
in Victoria, Australia. This wind farm is considered to be Victoria’s
largest wind farm by nameplate capacity (194.4 MW) when com-
pleted in 2010 [12]. For this purpose, three methods of energy stor-
age are investigated and compared: Pumped Seawater Hydro
(PSHS), Compressed Air Energy Storage (CAES), and Sensible Ther-
mal Energy Storage (TES). These technologies are all commercially
proven, although not all have previously been used on this scale.
A large body of research in the use of energy storage to comple-
ment wind power has been undertaken and reported in the litera-
ture. Many studies have investigated technical and power control
aspects, and a variety of papers have presented cases for using en-
ergy storage to complement wind power in island locations with
isolated grids [13]. Of the large-grid studies, Swider [14] has con-
cluded that the ‘CAES can be economic in the case of large-scale
wind power deployment’ in the German electricity grid. Ummels
et al. [15] have concluded that ‘cost savings from energy storage in-
crease with the amount of wind power installed’ in the Dutch grid.
However, Lund et al. [16] have reported that CAES is not economic
for the grid of Denmark. The above studies have shown that the lit-
erature has indicated that economic feasibility of energy storage is
highly grid-dependent.
In contrast to the above studies, this paper investigates the eco-
nomic feasibility of various energy storage systems to enhance
wind power in a low penetration, base-load dominated, large
capacity electricity grid. This project is an extension of the work
by Hessami and Yeoh [17] and Hessami and Rocha [18], and it
incorporates more sophisticated optimisation, more detailed cost
analysis, an investigation of TES, and a method which allows for
reliable comparison between the different technologies.
The existence of PSHS and CAES systems in commercial opera-
tion indicates that they are certainly commercially viable under
the right conditions. However, it was not possible to find in the
open literature an example of a commercially operating electri-
cal–electrical storage system using TES as most studies utilise solar
heating or waste heat from industrial processes. However, a confi-
dential industry source has stated that a recent feasibility study
about the use of TES has found it not to be feasible for their envi-
ronment and operating conditions. The model presented in this pa-
per will therefore serve to reinforce or counter their analysis.
This research study incorporates technical feasibility, opera-
tional optimisation, costing, and financial analysis elements as
shown in the block diagram of Fig. 2. A spreadsheet model which
was developed in this project as described in this paper is able to
optimise the parameters of the storage systems, as well as its oper-
ation, to determine the commercial viability of each storage system
in conjunction with the PWF application.
2. Portland Wind Farm (PWF)
The PWF is consisted of four individual wind farms shown in
Fig. 3; further details for each farm are provided in Table 1 [19].
PWF with a total installed capacity1 of 186 MW is located along
the Victorian coastline, southwest of Melbourne. Sites along the
southern coast of Australia are ideal for wind power generation as
they experience consistently strong winds, are in close proximity
to the National Electricity Grid, have low population density, and
1
The installed capacity of PWF in 2009 when this study was undertaken was
specified to be 194.4 MW. However, at that time, not all the wind farms were yet
completed. The revised total installed capacity of PWF is now 186 MW. All the
calculations performed in this study are based on the original installed capacity of
194.4 MW.
 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763 2757

Fig. 1. The connection of an energy storage system to this wind farm would allow energy to be stored when the wind output is high and the spot price is low, and to be
discharged when the spot price (that is, the power grid demand) is high.

Available Resource
Plant design
technology availability

Resource Market Operating Operating Operating

Capital cost
data data strategy characteristics costs

Revenue

Return on
Investment

Fig. 2. Block diagram of the key information collected and the work completed over the course of this research project to model the wind power generation and storage
system to evaluate the economic viability of large-scale energy storage.

have large farmlands available for turbine installation. The average

annual wind speed in the Portland area is about 8.3 m/s. The tur-
bines used in these installations are Neg Micon for Yambuk, and
RE Power for Cape Bridgewater and Cape Nelson South; the turbines
for other farms had not been publicised at the time of writing this
paper. The turbines are reported to operate in the wind speed range
of about 3.5–25 m/s with a capacity factor ranging from 27% to 38%.

3. Details of energy storage devices

Each method of energy storage considered in this study as well

as the critical practical considerations for their implementation in
South-Eastern Victoria is briefly introduced in the following para-
graphs. Table 2 summarises the specific parameters of each system
to be entered into the simulation, along with a basic cost estimate.
These specifications were provided by a number of industry
sources. Round trip efficiencies (see caption of Table 2 for its defi-
nition) are provided as a basis for comparison. However, in reality,
the performance of such systems is more dependent on where such
inefficiencies occur.

3.1. Pumped Seawater Hydro Storage

Pumped hydro storage is the most well-known of the large-

Fig. 3. The four individual wind farms which constitute the Portland Wind Farm. scale energy storage systems, and is a very mature technology,
2758 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763

Table 1 technology: a 290 MW plant was commissioned in Huntorf,

Installed capacity and average electric energy generation of wind farms in Portland Germany, in 1978, and a 110 MW plant in Alabama, US, in 1991 [3].
Victoria [19].
Underground caverns are the cheapest solution for storing sig-
Installed Average Commissioned Number of nificant quantities of air at high pressures. Hessami and Rocha
capacity annual turbines [18] identified a depleted gas field in the Waare formation of the
(MW) output
(GW h)
Otway Basin for this system. It is an economical and practical alter-
native to the more common solution-mining method.
Yambuk 30 100 January 2007 20  l.5 MW
Cape Bridgewater 58 195 November 2008 29  2 MW
Cape Sir William 32 141 May 2009 22  2 MW 3.3. Thermal Energy Storage
Grant
Cape Nelson 66 73 (estimate) ? 27  2 MW For the purpose of the simulations in this study, sensible heat
Total 186 616 – 98
storage in conjunction with appropriate turbines was considered
(see Fig. 4c) as this technology is very simple and thus highly reli-
able [3]. To charge the system, current is passed through a resistor
to heat carbon blocks which are the energy storage media. To dis-
with several systems operating around the world. In such systems,
charge, water in liquid phase is passed through pipes embedded in
energy is stored by the difference in gravitational potential be-
tween two bodies of water at different heights as schematically
shown in Fig. 4a. Pumped seawater hydro plant is an attractive op-
tion for Australia due to its frequent exposure to long-running
droughts. A typical PSHS system is currently in operation in Oki-
nawa, Japan, with a 30 MW peak-turbine-capacity high-head stor-
age dam [20,21]. The system is ‘‘charged’’ by pumping water to a
pond at a high elevation relative to the sea level, and it is dis-
charged by allowing the water to flow out of the pond through a
pump-turbine configuration.
An ideal topography directly adjacent to the Cape Bridgewater
Wind Farm exists for the placement of a storage pond, providing
an elevation of 135 m within 250 m of the shoreline. The pump-
turbines used in the simulation are based on the Hitachi pump-
turbines used in the Okinawa Hydro Plant [20,21]. The output Fig. 4a. Schematic of a Pumped Seawater Hydro Storage.

power of the plant is inherently scalable, as more turbines can

be added.

3.2. Compressed Air Energy Storage

A CAES system separates the two major components of a nor-

mal gas turbine – the compressor and the power turbine as shown
in Fig. 4b. Air is compressed and stored underground to charge the
system. To discharge, the compressed air is fed directly into the
combustion chamber which then flows into the power turbine. In
a conventional gas turbine power plant, the compressor normally
absorbs around 2/3 of the turbine’s output; thus, the CAES turbine
produces around three times as much specific power as a standard
turbine during its operation. The pre-compression of the air thus
acts as an energy storage system. CAES is a commercially proven Fig. 4b. Schematic of a modern CAES plant [22].

Table 2
Energy storage system parameters and capital costs. Costings and plant specifications are obtained from confidential industry quotations. Leakage losses are negligible for CAES
and TES over the timescales of interest. All costs are in 2008 Australian dollars (A$).

Storage type PSHS CAES TES

Plant n  31.4 MW pump/turbines 4  20–80 MW gas turbines 150–300 MW steam turbines
Storage media Seawater at elevation Compressed air in cavern Heat in carbon blocks
Key losses Pump 2.0% Compressor 30.9% Heating 1%
Turbine 12.7% Diabetic expansion 20% Discharging 71%
Line loss 1.9% Transmission 1.0% Transmission 0.3%
Transmission 0.3%

Round trip ga 84.3% 64.0% 28.7%

Fixed cost A$45,150,000 A$15,500,000 A$15,500,000
Cost/MW h A$17,300 A$4900 A$5970
Cost/MW A$9,73,400 A$10,09,000 A$7,50,000
Maintenance cost 0.2% of capital expenditure A$2/kW yr 0.2% of capital expenditure
Running costs A$4,00,000 pa A$4,00,000 pa A$4,00,000 pa
Fuel cost A$3.75/GJ
a
Roundtrip efficiency is defined as the energy output of the storage divided by the energy input required to charge it to a given level.
 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763
Fig. 4c. Schematic of a Thermal Energy Storage.
the carbon blocks, extracting the energy to vaporise the liquid
which then feeds an expansion turbine. The storage medium con-
sidered in the simulations stores heat in the blocks at 750 °C; heat
is extracted by a steam turbine operating at inlet conditions of
14 MPa (gauge) and 700 °C.
3.4. Other storage devices considered
A wide variety of other energy storage systems are also avail-
able but none were deemed to be as suitable for this application
as those chosen for this study as described above. Most current
battery technologies suffer from deep-cycle problems, have too
short a service life to be practical for this application, and signifi-
cant technical challenges exist in up-scaling the technology.
Hydrogen fuel cells were considered but the capital costs are cur-
rently prohibitively high [3]. Flywheels can achieve high energy
densities but a significant continuous power input is required to
maintain storage levels. Other technologies, such as superconduc-
ting magnetic energy storage and super capacitors, are not capable
of energy storage on the scale required for the PWF application
being considered here.
4. Data used in the simulations
For the purpose of the model, the four wind farms of PWF are
treated as a single entity providing power to the Victorian grid.
The operation of the energy storage system was modelled using
historical operational data to determine the extra revenue that
would be generated if energy storage was available. Three years
worth of Victorian electricity spot prices, in half-hourly intervals,
were obtained and analysed. Three years of 5-min power readings
from Yambuk Wind Farm (one of the four wind farms making up
the PWF) were converted to half-hourly averages and scaled up
to the output of PWF; note that the installed capacity of Yambuk
is 30 MW compared to 194 MW for PWF. The standard deviation
of the data conversion process was calculated to be 2.3%. The total
electrical energy output based on the half-hourly averages was
found to be 94.8 GW h/year in 2007 which compares very favour-
ably with the ‘‘in excess of 90 GW h/annum’’ reported by the wind
farm’s owner and operator [12]. Both the data and the scaling pro-
cess were shown to be reliable by independent verification with
wind speed data from Port Fairy and Portland (see Fig. 3 for the
location of the wind farms as well as that of the weather stations)
obtained from the Australian Bureau of Meteorology over the same
period. As shown in Fig. 5 for the 4000–4600 half-hourly interval of
2007, the correlation between the wind speed data of Port Fairy
and the power output of Yambuk station is very good. A better cor-
relation is expected if actual wind data for Yambuk Wind Farm was
available and could have been used in the preparation of Fig. 5.
The mathematical formulation and calculations of the computer
model were implemented in the Matlab computer software envi-
ronment. The model calculates the rate of return (ROR) or return
on investment for any system configuration. The number of tur-
bines, and the storage size, can be varied. For maximum flexibility,
2759
Fig. 5. Wind speed (m/s) in Port Fairy and Yambuk’s power output vs. time.
a modular layout was used in the development of this model. The
independent modules can be easily modified to suit different oper-
ational characteristics, more detailed industry-appropriate cost
information, and other relevant parameters. By investigating a
range of possible values for storage and plant size, the parameters
which maximise the rate of return on capital investment in a stor-
age system can be found.
For the purpose of these calculations, it was assumed that
Inflation rate = 2.5% pa.
Increase in electrical spot price = 5% pa.
Increase in maintenance cost = 2.5% pa above inflation.
Increase in running costs = 2.5% pa above inflation.
It should be noted that interest rate is not relevant when calcu-
lating ROR. ROR is a measure of the ‘‘equivalent interest rate’’
which would have been generated on an equivalent investment
in, for example, a bank at that interest rate.
5. Operational strategy
The objective of this investigation is to find the maximum pos-
sible revenue which can be generated by the addition of any given
storage system (that is, storage type and size as well as power rat-
ing) over the 3 years of operation considered in the model. This re-
quires determining the optimal operation for a given system on a
real-time basis. For simplicity, it is assumed that the plant operates
at the same conditions for the whole of each half-hourly period. If
the storage is not close to being full or empty, the following oper-
ations are possible:
1. Storage is ‘‘charged’’ using power from PWF, selling no power
(or reduced power) to the grid.
2. Storage is ‘‘discharged’’, selling power from storage and wind
farm to the grid.
3. Storage is ‘‘bypassed’’, selling only power from the wind farm to
the grid.
There are many strategies available to operate the system to
generate extra revenue. Some of these were tested using the mod-
el, and are explained briefly below. The revenues generated are
compared in Fig. 6.
A simple technique is to charge the system whenever the spot
price is below a ‘‘charge’’ (C) price, and discharge when above a
2760 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763

140

Revenue ($M over 3 years)

130

120

110

100

90

80
No storage Vary sell, fixed Vary sell, buy Account for Predictive c/d Improved Combination Optimum
buy storage level price predictive solution

Optimisation method

Fig. 6. The revenue generated using each operation strategy, compared with the revenue generated by the wind farm without storage. With increasing sophistication, the
techniques approach the optimum solution.

‘‘discharge’’ (D) price. An optimum C and D can be found by logic or parameters may be appropriate for each type and size of
exhaustive search. This technique is effective during normal oper- storage device. In order to reliably compare between different stor-
ation, but does not do well during periods of high or low spot price. age systems, the best possible revenue that can be generated by a
This strategy can be improved by modifying the C and D values given storage device over the 3 year data period needs to be found.
to Cm and Dm respectively, as shown in the following equation. Any A technique has been developed to achieve this.
storage level, S, below 1 (i.e., not full) increases the spot price at
which the system will begin to discharge, and thus obtain better 5.1. Dynamic programming
prices as the system discharges. W is a weighting factor which
determines how much of an effect the storage level is allowed to As mentioned above, sophisticated techniques can indeed gen-
have on the operation. The optimum modification function erate extra revenue as reflected in the diagram of Fig. 7. However,
(1  S)15, weighting factor W, and base values of C and D were to reliably compare between different storage systems, the best
determined by an exhaustive iterative search process. possible revenue should be found. Consider the ‘‘path’’ created by
a given combination of charge and discharge cycles shown in
Dm ¼ D  ½1 þ W  f ðSÞ; where f ðSÞ ¼ ð1  SÞ15 Fig. 8. If the revenue from the paths could be compared, the best
possible path could be selected. With three possible actions at each
The operation of the plant can be further optimised based on time step n, the number of possible paths is 3n, which quickly be-
the fact that the distribution of the spot price varies throughout comes too large to handle. However, using a method of dynamic
the year. To take this into account, an optimum C and D can be programming adapted from [16], it is possible to reduce the num-
determined using future prices for a given period, on the basis that ber of outcomes.
wind farm outputs and spot prices can be reliably forecasted under The only items of interest at the end of each time period are the
most conditions several days in advance. D is based on a top per- revenues generated up to that point, and the corresponding storage
centile, and C on a bottom percentile of prices. levels. If two paths ending at a given time have the same storage
It is clear that increasingly sophisticated operating logic can be level, only the path corresponding to the highest storage level
brought to bear in order to improve the performance of each stor- needs to be recorded; the other path is sub-optimal and can be dis-
age medium. The revenues generated by various operating strate- carded. By discretising the number of possible storage levels, it is
gies for a given PSHS system are shown in Fig. 7. However, different possible to make the storage levels overlap. This method clearly
ROR for these plant sizings

10 X: 1800
Y: 188.4
8 Z: 9.622

0
800
600 6000
5000
400 4000
3000
200 2000
1000
Output rating (MW) 0 0
Storage size (MWh)

Fig. 7. Results of optimisation calculations for the PSHS system. The designated point has the highest rate of return. The X, Y and Z coordinates are storage size (MW h), output
(MW) and ROR (%).
 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763
Fig. 8. The two paths designating charge–discharge and discharge–charge shown
above result in approximately the same end storage level. The greater of the two
revenues generated by the two paths is stored as the maximum revenue at that
storage level at that time.
introduces some rounding error. However, the majority of this
rounding error is predictable:
Rounding error / discharge speed of device – Step size between
storage level discretisations
Therefore, a subroutine was written to predict the rounding er-
ror introduced by a given choice of discretisation in order to choose
the number of discretisations to minimise the error introduced.
Testings showed that this code predicted the relative error with
great accuracy so that the correct step size could be chosen.
6. Results and discussion
Simulations were undertaken for a wide range of storage sizes
and output ratings for each storage device, using the calculations
illustrated in the block diagram of Fig. 9 to find ROR for each con-
figuration. The extra revenue gained by the ability to store more of
the wind farm’s output, or to provide more power to the grid dur-
ing high-demand periods, must be balanced against the increased
Fig. 9. Revenue is calculated by modelling the operation of the storage device for a given set of storage parameters. The rate of return on Investment is then calculated by the
model using the process shown above.
2761
capital cost. Each energy storage device has a set of characteristics
resulting in the best rate of return, shown in Fig. 7 for the Pumped
Hydro System in its two key dimensions of storage capacity and
turbine size. A summary of the results for each storage device is
shown in Table 3.
As can be seen in the results presented in Table 3, the CAES sys-
tem appears to be by far the most profitable energy storage device
for PWF. The profitability of the CAES system can be attributed to
(a) its storage medium which is relatively cheap to store in large
quantities, and (b) its reliance on the availability of existing under-
ground caverns in the Ottway Basin. This allows the system to sup-
ply power continuously during long high-demand periods.
Furthermore, the CAES system provides extra power to the grid
which is in addition to the output of PWF.
6.1. Operational analysis
The two diagrams shown in Fig. 10 show the operation of the
CAES system under different conditions. During periods of normal
spot prices (top diagram), the system charges and discharges on a
daily basis, with the change in level over a day a function of the
wind farm output and the spot price. In anticipation of a high spot
price on the bottom diagram of Fig. 10, the system is fully charged,
and a large proportion of the system is discharged over the follow-
ing 12 h period.
6.2. Sensitivity analysis
A sensitivity analysis was performed to quantify the effect of
varying certain parameters on the calculated rates of return of each
system. The CAES system’s rate of return was found to be particu-
larly sensitive to capital cost, fuel cost, and the annual increase in
electricity price. Variations in maintenance and running costs, and
charge and discharge efficiencies, had little effect on the profitabil-
ity of the system.
2762 M.-A. Hessami, D.R. Bowly / Applied Energy 88 (2011) 2755–2763

Table 3
Summary of optimum specifications for each plant, the capital expenditure required, and the revenues generated by each. All costs are quoted in 2007 Australian dollars (A$
million).

Storage type PSHS CAES TES

Storage size (MW h) 1800 1887 5500
Storage size (physical) 4.89  107 m3 @ 135 m 3.5  107 kg @ 19.6 MPa 18,330 tonnes @ 750 °C
Output rating (MW) 188.4 110 240
Output plant 6  31.4 MW turbines (31.8 MW pumping) 4  27.5 MW turbines (16.5 MW compression) 1 steam turbine
Capital expenditure A$260 A$136 A$229
Extra revenue (2007) A$20.06 A$23.50 A$16.20
Fuel cost (2007) A$0.00 A$5.35 A$0.00
Maintenance cost (2007) A$0.52 A$0.22 A$0.47
Running cost (2007) A$0.40 A$0.40 A$0.40
Profit (2007) A$19.14 A$17.53 A$15.33
ROR on capital expenditure 9.62% 15.43% 8.03%

able addition to the Portland Wind Farm. Compressed Air Energy

Storage (CAES) appears to be the most profitable storage medium
for this wind farm and grid, requiring a capital expenditure of
A$136 M and generating a rate of return of 15.4%, making it a fea-
sible option in good economic times. Pumped Seawater Hydro
Storage is predicted to generate a rate of return of 9.6%, the capital
investment required being very much higher than CAES at
A$260 M. Thermal Energy Storage generates a rate of return of only
8.0% on its capital cost of A$229 M, indicating that it is unlikely to
be commercially feasible.
The conclusion of superiority of CAES over PSHS is specific to
this study and it is influenced by the availability of natural under-
ground caverns in the Ottway Basin and the prevailing power net-
work type in Victoria. PSHS is generally economical when there
exists a natural system of rivers in a mountainous topography.
However, building of hydraulic dams and the necessary reticula-
tion system makes PSHS costly.
In addition to the economic advantages demonstrated, many
authors have discussed the practical advantages of such systems,
which greatly improve the usefulness of wind farms by creating
peaking plants in place of current non-dispatchable power sources.
It is recommended that for future work, in order to determine
the change in CO2 emissions from the use of these energy storage
systems, the emissions from the power sources that the storage
system replaces must be carefully quantified. Denholm and Kulcin-
ski [23] present a study of electricity storage life cycle CO2 emis-
sions which could be adapted to this research.
Furthermore, the rates of return calculated, especially for the
CAES system, indicate a significant opportunity for investment.
Clearly the resources available to this study could only facilitate
a basic estimate of capital and operating costs. However, based
on the results presented in this paper, investment in a front-end
Fig. 10. The operation of the CAES system under periods of normal spot prices (top)
engineering package is highly recommended.
and very high spot prices (bottom). The system is able to operate as a peaking plant
for long periods, providing power when demand is high.
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