Question

Suppose you own some land next to a 50 MW wind farm located on Colorado’s Front Range. Your land has a fantastic cliff/ridgeline with an elevation difference of 250 m. Evaluate whether or not you can make money by building a pumped hydroelectric energy storage system on your land that interfaces with the wind farm. Your plan is to capture excess energy from the wind farm or buy energy from the wind farm when electricity prices are low and sell that energy back to the grid when electricity prices are high (assume that the utility that owns the grid will grant you a fair contract). You find that a good power rating for your storage system is 50% of the rated wind farm output, or 25 MW. Also your storage system should be able to generate electricity at rated power for 8 h.

a. Determine the flow rate and reservoir size needed to accomplish the required power output and energy capacity. Pumped hydroelectric plants generally run at 80%–90% generating efficiency, depending on the size of the machinery. Suggest a reasonable surface area and depth for your two reservoirs.

b. Assume it costs $500 per kW to install your turbomachinery and penstocks, plus $2 per cubic yard to build reservoirs. Calculate the initial capital cost of your pumped hydroelectric system.

c. Suppose you can buy energy from the wind farm at $0.035/kWh between the hours of 10:00 pm and 8:00 am to charge your storage and sell energy between 1:00 pm and 9:00 pm back to the grid at $0.1/kWh. Select a reasonable simple payback period that would motivate you to invest in energy storage. Calculate the maximum capital cost expenditure on your energy storage system that would allow this payback period.

d. Would you decide to build this energy storage system? Why or why not?

Answer 1