CAES Overview

Compressed air energy storage (CAES) is a unique in its ability to efficiently store and redeploy energy on a large scale in order to provide low-cost energy and enhance grid reliability. A CAES power generation facility uses electric motor-driven compressors to inject air into an underground storage cavern and later releases the compressed air to turn turbines and generate electricity back onto the grid. Suitable storage media can include underground salt dome caverns, depleted oil/gas reservoirs, underground aquifers, or in certain cases abandoned underground hard rock mines. Compression normally occurs during offpeak hours, when power prices are low. During hours of high electric demand, compressed air is withdrawn from the cavern, preheated, and introduced to one of several combustors. In the combustors, natural gas is fired to further heat the air, and the hot, expanding gases are used to drive expansion turbines. These turbines are connected to a generator, which produces electricity for the grid.

PowerSouth's McIntosh CAES plant

History

The first CAES plant, a 290 MW facility, was built in Huntorf, Germany in 1978, and the 110 MW McIntosh CAES plant began operations in Alabama in 1991. These plants have operated with exceptional track records over their combined 50+ year lifetime, solidifying CAES as a viable power asset.

Why CAES now?

Two key dynamics – market evolution and CAES project design advancements – have dramatically boosted the CAES value proposition, making it the most attractive new-build electric generation solution for serving intermediate load.

ERCOT market evolution strongly supports CAES economics…

• Tighter balance of supply and demand for electric generation and significant additions of intermittent renewable resources improve the value of time-shifting energy from offpeak to onpeak

• Projected natural gas price escalation will lead to higher power and ancillary service prices

• Organized and liquid wholesale energy and ancillary service markets allow CAES to compete with
traditional generation to provide valuable grid services

• Utilities and retail electric providers require long-term energy and ancillary services hedges to
manage commodity risk and reduce costs