2012/03/01 by Dogan Keles, Rupert Hartel, Dominik Möst +1 · 1 citation
Engineering · Economics, Econometrics and Finance · #Electric Power System Optimization #Energy Load and Power Forecasting #Capital Investment and Risk Analysis
paper · doi:10.21314/jem.2012.070
openalex publication_date 2012/03/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/11
ABSTRACT In this paper a combined approach is introduced, integrating electricity prices simulated with the help of a financial model into an optimization model that evaluates a compressed-air energy storage (CAES) plant investment. The financial model based on a regime-switching approach delivers suitable price paths. Based on these price paths, the optimization model maximizes the annual return of the CAES plant, taking bidding strategies on the spot and reserve power markets into account. A Monte Carlo simulation is carried out for the annual return, which, in turn, is used to determine the expected net present value (NPV). A negative NPV is obtained when applying an interest rate of 6%. Thus, the investment in current CAES plants is not attractive, as energy companies generally expect an annual yield over 8%.>