CAES: bright prospects
Keith McGrane, who heads up Gaelectric’s energy storage operations, explains the story so far and anticipates a positive outlook for the technology.
Meeting the challenge of putting “air underground under pressure” has been Keith McGrane’s main priority since joining Gaelectric in 2008. “What we have achieved is an innate belief and understanding of the reason why storage needs to be a big part of the solution for renewables integration,” he reflects.
Describing the innovation process, McGrane draws an analogy with the transformational development of mobile phones since the 1980s. Energy storage is going down the route taken by the mobile sector by taking a 20th century technology and moving it into the 21st century. On CAES, he explains: “The functionality of the technology and the application of that technology is going to greatly increase as a consequence of the cost point coming down quite dramatically in the next number of years.”
Indeed, the technology has been proven since 1978 when the first plant was constructed in Huntorf, Germany. The estimated cost per MW at the time was equivalent to €3 million. In 2015, Gaelectric and Dresser-Rand have reduced that cost by 53 per cent and the two companies expect to reduce it to €750,000 per MW by 2018 through further efficiency gains.
The latter figure refers to a greenfield opportunity such as the Larne site. However, CAES is also due to be installed at brownfield locations e.g. Ineos Enterprise’s brine plant in Cheshire or the Dutch and Danish salt deposits owned by paint manufacturer AkzoNobel. New caverns can be readily constructed and planning permission is more straightforward as these areas are already zoned for industrial use.
“The CAES technology is never going to stand still,” McGrane states. “It’s always going to move and our adaption of the design is very, very important because not all markets will be the same. There’s a specific need for the industry in Ireland. In other markets, there will be greater levels of interconnection. There will also be a different plant mix so it’s about adapting the design to a specific market application.”
Technology development is taking place against a radically changing landscape in utilities with the financial crisis resulting in a 40 per cent fall in annualised returns to shareholders (up to 2012). A time of flux opens up opportunities for new entrants, who need to be supported in the market.
Gaelectric’s technology partnership depends on three elements:
• technological innovation;
• a good regulatory framework; and
• contracted revenue streams for investors.
A similar approach took the Tesla Roadster from the blueprint to production line in two-and-a-half years with the help of some of the best automobile executives, battery researchers and Silicon Valley entrepreneurs.
Navigant Research calculates that global CAES capacity currently stands at 2.5GW but could grow to just under 50GW by 2024: a twenty-fold increase in deployment.
“Larne is the framework project,” McGrane comments. “It’s going to be the blueprint for this type of technology right across Europe.” The greatest potential is in low-lying and coastal areas in Northern Europe which provide ready access to salt deposits, wind resources and energy demand centres.
Construction at Larne is due to start in 2016, followed by Cheshire in 2019 and two further sites in Germany in 2020. Sites in the Netherlands and Denmark are expected to be developed between 2018 and 2020 and the company’s planned portfolio amounts to 1-2GW capacity.
History provides a useful precedent. The growth of nuclear energy after the 1973 oil crisis was accompanied by similar growth in pumped hydro storage (as policy-makers needed a reliable back-up system). CAES technology has not yet been exploited to the same extent but McGrane sees it as being on the same trajectory albeit in the different context of intermittent renewable energy.
