SFW is committed to developing energy practices that support decarbonization and regularly undertakes scientific studies to quantify the potential impact of its technologies on various energy systems. Our latest study in partnership with encoord GmbH, assesses the potential value of integrating Liquid Air Energy Storage (LAES) into the European power system and reveals useful insights for potential investors in this game-changing technology.
The big picture
The EU targets driving the need for large scale energy storage systems
When it comes to the environment, scientists, governments and industry leaders have a huge challenge on their hands. But whilst it remains difficult for these groups to agree on the exact steps that will protect our planet without stifling economic development, there is almost unanimous consensus that a reduction in greenhouse gas emissions is key.
This is why the EU has set ambitious targets for reducing greenhouse gas emissions by 55%and increasing the share of renewable energy sources (RESs) in the energy mix to 42.5%, by 2030.
Achieving these targets relies on our ability to harness the full potential of RESs and successfully integrate them into existing power systems; something that - due to their intermittent nature - places a huge value on grid-scale long duration energy storage (LDES) technologies such as LAES.
This study was designed to assess and quantify the value of integrating LAES into the European power system, with a particular focus on the German and Spanish markets. It aimed to quantify the impact of integrating LAES into the European interconnected power system in terms of three critical parameters:
- system production costs
- reduction in the curtailment of RES generation and
- reduction in the dependence on fossil fuel-based generation, especially natural gas-based generation.
The insights gained from the study are expected to help network operators and regulators frame policies that will aid the growth of LDES technologies in general and LAES in particular.
The study was carried out by a team of power system analysts at SFW in partnership with their counterparts at encoord. It involved the use of a comprehensive zonal production cost model for 30 European countries under various scenarios with high shares of renewable energy sources.
The production cost model was implemented in encoord’s commercial power system modeling software, SAInt. The model's “Baseline” scenario was set to the year 2021 when the shares of RESs in Europe, Germany and Spain were 19%, 32%, and 34% respectively. Two additional sets of scenarios called “Conservative” and “Optimistic” were designed on the basis of the expected RES penetration levels in 2030 and 2040 respectively.
While the entire European power system was simulated, the results were primarily analyzed for Germany and Spain. In both countries, the share of RESs in the energy mix is high and expected to grow considerably in the coming years. It is commonly accepted that this growth in RES capacity cannot be managed without the large-scale deployment of energy storage systems in general and LDES systems in particular.
Under the “Baseline”, “Conservative” and “Optimistic” RES penetration levels, numerous simulation scenarios were designed by varying the following parameters:
- CO2 emission prices;
- LAES configurations including the number of LAES units, charging power and storage duration; and
- Reserve requirements in the grid (higher RES penetration levels are expected to result in higher reserve margin requirements for grid operators).
The study confirmed that there is a significant role for LAES in decarbonizing the European power system. The following insights derived from the results of our study highlight the key takeaways for relevant stakeholders who are interested in understanding the potential impacts of LDES technologies on the wider power system. The insights could also help regulators, grid operators and policymakers in framing the policies and regulations that will support the successful growth of LDES technologies in Europe.
- LAES can reduce the wasteful economic curtailment of RES generation by 40+%
- LAES can contribute to CO2 emission reductions of up to 21%
- LAES has the potential to eliminate a quarter of the natural gas consumed to generate power
- LAES can lead to a 19% reduction in the operating costs of a power system.
1. LAES can reduce the wasteful economic curtailment of RES generation by 40+%.
Curtailment of RES generation typically happens during periods when a system’s RES generation exceeds demand and conventional power plants lack the technological capability to ramp down production and restore balance. It’s a problem that’s expected to rise with the growing penetration of RESs in the energy mix and something that the study’s results show can be significantly reduced with the addition of LAES.
- Results suggest that under one of the “Conservative” scenarios excluding LAES, almost 3% of the available solar and wind generation would be curtailed in Germany and Spain, totaling 12 TWh annually.
- Under the “Optimistic” RES penetration scenario, the annual curtailment increases to 15% of the total generation or 91TWh in Germany and Spain. This figure is believed to be conservative since it does not take into account the congestion likely to occur in certain transmission network nodes that is masked by the zonal nature of the simulation model.
- Under the “Conservative” scenario with LAES included, RES curtailment was reduced by 38-42% in Germany and Spain depending on the specific scenario modeled and the configuration of the LAES fleet deployed.
- Under the “Optimistic” scenario, by deploying a LAES fleet comprising 20 units each with a discharge power of 100MW, charge power of 200MW and 20 hours of storage duration, RES curtailment exceeding 4TWh could be reduced in both Germany and Spain.
2. LAES can contribute to CO2 emission reductions of up to 21%.
In systems where LAES is included, CO2 emissions can be significantly reduced. This is partly due to the improved utilization of RES generation and partly due to the reduced reliance on fossil fuel-based generation/natural gas consumption.
- Under the Optimistic scenario for the Spanish grid with LAES, CO2 emissions decreased by 78% when compared with the Conservative scenario without LAES.
- Under the Optimistic scenario with LAES in Spain, the CO2 emissions were 21% lower when compared with the Optimistic scenario without LAES.
3. LAES has the potential to eliminate a quarter of the natural gas consumed to generate power
The results of the study suggest that mechanical LDES technologies such as LAES can offer grid operators a credible alternative to natural gas-based generators in terms of their functionality in the grid, thanks to their ability to contribute to system reserves. The usage of a synchronous generator on the discharge side enables LAES to contribute to the spinning reserves in the grid.
- The reserve margin was increased to 5% under the “Conservative” and “Optimistic” scenarios from 3% under the Baseline scenario. The “Conservative” scenario was also simulated with a 3% reserve margin. When the reserve margin was increased, it was observed that LAES displaced a portion of natural gas-based generation.
- Under the “Optimistic” scenario, the simulation results show that the natural gas consumption dropped by a whopping 25% in Spain when LAES was deployed.
4. LAES can lead to a 19% reduction in the operating costs of a power system
The study showed that power systems including LAES can benefit from a higher utilization of cheaper RES generation which in turn leads to a decrease in the system operating cost.
- Under the “Optimistic” scenario for Spain, including LAES led to a 19% decrease in system operating costs. This decrease is achieved when compared with the “Optimistic” scenario excluding LAES, thereby quantifying the direct impact of adding LAES to the system.
- The effects of installing LAES were observed across the wider European system. Under one of the “Conservative” simulation scenarios, when LAES was installed in Spain, the Europe-wide savings totaled an amount which was equivalent to 18% of the yearly generation costs in Spain.
The infographics below summarize selected key results from the study.
Figure 1. RES and LAES installed capacities under selected simulation scenarios
In Figure 1, the RES installed capacity considered in the Conservative and Optimistic scenarios are detailed along with the LAES configuration considered in one of the simulation scenarios. Other LAES configurations were considered in other simulation scenarios. More details about all the simulation scenarios are provided in the detailed report.
Fig 2. Quantifying the impact of adding LAES to the power system
As shown in Figure 2, the System cost in the “Optimistic With LAES” scenario is 70% lower than the cost in the “Conservative No LAES” scenario. A large part of this difference can be attributed to the higher penetration of RESs in the Optimistic scenarios.
However, the direct impact of adding the LAES in terms of total system cost and CO2 emissions can also be clearly seen in the scenarios simulated and the data presented in Figure 2.
LAES harnesses a freely available resource—air, to provide a reliable, flexible, and sustainable energy storage solution. LAES is the only LDES technology available on the market today that offers multiple GWh of storage, is scalable with no size or geographic constraints, and produces zero emissions.
LAES is ultra-flexible, durable, cost-competitive and free from the capacity degradation issues observed in some conventional energy storage technologies. Numerous independent research works have shown that the energy density of LAES is one to two orders of magnitude greater than competing technologies meaning that a large quantity of energy can be stored in a small space. Furthermore, storage capacity can be easily increased as required, simply by adding more tanks.
The discharge power of a LAES system typically ranges from 25MW to over 100MW while the storage capacity typically ranges from 200MWh to 2.5GWh. With charge power, discharge power and storage capacity decoupled, LAES is well-suited to long duration storage and bulk energy shifting applications.
The versatility of the LAES system makes it capable of serving every level of the electrical power system. With a long lifetime of 30 years and off the shelf components which have been used in other industries for decades, LAES is a future-proof, low-risk storage technology.
LDES technologies such as LAES can provide a range of benefits to the wider European electricity market and grid. These include:
As this study has shown, LDES systems can be charged during periods of high RES generation, thereby minimizing the need for economic curtailment. The energy stored in LDES systems can be discharged over long durations during periods of low RES generation. This ensures that the installed RES capacity is optimally utilized.
Numerous independent research studies have shown that several nodes in the transmission network are expected to experience congestion at varying levels as the share of RESs in the energy mix rises. Investment in LDES technologies such as LAES could be one possible solution to relieve the congestion at these nodes. Detailed grid studies can identify specific nodes in the transmission system where LAES can have the biggest impact in terms of providing congestion relief.
Deferral of transmission investments
The installation of LDES at specific nodes in the power system can potentially delay the need to invest in costly transmission infrastructure upgrades. This could be important in certain parts of the power system which have a higher concentration of renewable energy sources but may not necessarily have enough load to consume all the generated power locally.
Provision of grid services
With a conventional synchronous generator on the discharge side, mechanical LDES technologies such as LAES can contribute to improved grid stability through the provision of services such as rotational inertia, reactive power and voltage support. The demand for these services from grid operators is expected to increase in the coming years as the installed capacity of RESs increases.
 Compared with 1990
 From 32%
 Andrea Vecchi, Yongliang Li, Yulong Ding, Pierluigi Mancarella and Adriano Sciacovelli, “Liquid air energy storage (LAES): A review on technology state-of-the-art, integration pathways and future perspectives,” in Advances in Applied Energy, vol 3, 2021