Optimal Utilization of Multiple Stored Media in Flexible Storage Facilities : An Application in Intermittent Electricity Production Using Salt Caverns

Intermittent electricity production due to increasing shares of renewable energies, carbon capture and storage technologies to retard climate change and the increasing usage of hydrogen for transport applications have one thing in common: They all need long-term large-scale storage facilities. Consequently, a future competition for the most cost-efficient storage sites is likely. This study describes an economic storage model which enables the user to identify the most economic utilization of one specific cavern storage site. Salt caverns represent the most flexible large-scale geological storage. Currently, salt caverns are mainly in use as seasonal gas storage. Europe offers a high potential for further cavern storage use. The model includes technical properties of salt caverns as storage facilities, and hydrogen, compressed air, methane and carbon dioxide as storage media. Real options analysis is used to value the stored medium during the lifetime of the cavern storage. The model suggests, based on the expected market development, the most attractive storage medium to maximize the overall discounted earnings. Potential storage costs for each application are compared with economic gains or cost savings (e.g. avoided carbon tax, revenues from peak-load sale of electricity, etc.) which are generated by an optimal time-dependent usage of the stored medium. As the simulation results will show, the estimated storage costs both for the natural gas storage as well as the CAES exceed the discounted revenues in the base variant. On top of that, the value of intertemporal arbitrage of carbon dioxide is not enough to cover the marginal costs.