Price Arbitrage | Asset Optimization | Ancillary Services


A CAES plant is one of the most efficient suppliers of ancillary services. Ancillary services provide two essential functions: balancing electrical supply and demand, and maintaining power quality. Electricity cannot be readily stored and consumers generally do not schedule increases or decreases in their consumption, so generators must be prepared to ramp up or down simultaneously with demand. Similarly, generators must stand ready to provide voltage or frequency support if power quality falls below operating tolerances.

In regulated markets, spinning reserve, reactive power, and the other ancillary services are included in the system capacity charge to customers. The bundled pricing of ancillary services makes it difficult to identify their true market value. As deregulation continues, these services will be priced and valued separately. This trend is apparent in several markets that are either already deregulated or well on their way. As these markets evolve, CAES will be especially well adapted to providing ancillary services.

Stable Heat Rates
Because ancillary services require units to reserve capacity until called upon, plants are forced to run at less than optimal capacity factors. On many units, the heat rate penalty for running at lower capacity factors can be substantial. CAES, on the other hand, suffers virtually no heat rate degradation down to 50% of capacity, and given its 4,300 Btu/kWh heat rate, maintains a significant cost competitive advantage.

Market Leading Ramping Ability
When called on to provide services, a CAES plant can respond more quickly and over a wider range of its output than competing technologies. The CAES ramping advantage enables it to offer up to 50% of its capacity, because it can ramp up to 100% from 50% in less than 15 seconds. Limited by their ramp rate, most generation sources can offer only 20% of their capacity for ancillary services. Any additional capacity would not be able to respond in a timely fashion.

Ability to Control Load
CAES can also provide ancillary services with significant, responsive load. The amount of compression can vary to provide load following services. This capability expands the range of available capacity for ancillary services while enabling constant generation output.

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