MISO Energy Storage Study Phase 1 Report - Utility Wind ...

ENERGY STORAGE TECHNOLOGIES
The Iowa Stored Energy Park Case Study 9
The Iowa Stored Energy Park Agency (ISEPA) developed a CAES proposal for a 270 MW plant
located in Dallas Center, Iowa, in 2010-11 due in service during 2015. The plant, however did
not proceed owing to problems with the rate that the compressed air could be extracted from the
geological cavern. Before the project ended, however, analysis was carried out to determine plant
economics. This economic analysis informs the Energy Storage Study because ISEPA is located
within the MISO footprint and represents 57 MISO member utilities.
The ISEPA scheme relied initially on harnessing low cost off-peak wind power and reselling that
power during peak hours at higher prices to provide intrinsic value. However, economics
analysis showed that the proposed CAES plant procured 20-30 percent of revenues from
extrinsic value by providing contingency reserves and ramping services. The ISEPA economics
study looked at forecast MISO market prices for energy and reserves, from 2015 to 2034. The
plant design included a very fast 10 minute ramp rate from cold steel to full 270 MW load and a
very low 15 percent minimum output (allowing greater down ramping than other MISO
generation units). The plant capital cost was estimated to be $1547 /KW and higher than an
equivalent size combined cycle ($1205 KW) or a combined cycle gas turbine ($805/KW) but
producing similar benefits (see Table 3-2).
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Table 3-2: ISEPA Net Benefit CAES Plant Economic Comparison (Source ISEPA)
The ISEPA economic analysis indicated plant benefit would reduce by $140 KW if cap and trade
markets were introduced for carbon emissions in the MISO market, because the latter would
increase off-peak prices relative to on peak and thus reduce energy arbitrage. The ISEPA project
“lessons learned” indicate that the plant would benefit from improved treatment of energy
storage in the MISO ASM. The study concluded that current MISO tariffs do not fully recognize
the value of fast ramping resources and generally tend to undervalue ancillary services. In
particular, CAES would benefit from relaxing spinning reserve requirements during shortage
9 www.isepa.com