As variable generation electricity sources, namely wind and solar, increase market penetration, the variability in the value of electricity by time of day has increased dramatically. In response to increase in electricity demand, natural gas “peaker plants” are being added to the grid, and the need for spinning and nonspinning reserves have increased. Many natural gas, and other heat source based, power plants exist as combined heat and power (CHP), or cogeneration, plants. When built for industrial use, these plants are sized and run based on heat needs of an industrial facility, and are not optimized for the value of electricity generated. With the inclusion of new, less expensive thermal energy storage (TES) systems, the heating and electricity usage can be separated and the system can be optimized separately. The use of thermal energy storage with CHP improves system economics by improving efficiency, reducing upfront capital expenditures, and reducing system wear.

This paper examines the addition of thermal energy storage to industrial natural gas combined heat and power (CHP) plants. Here a case study is presented for a recycled paper mill near Los Angeles, CA. By implementing thermal energy storage, the mill could decouple electric and heat production. The mill could take advantage of time-of-day pricing while producing the constant heat required for paper processing. This paper focuses on plant economics in 2012 and 2015, and suggests that topping cycle industrial CHP plants could benefit from the addition of high temperature (400–550°C) energy storage. Even without accounting for the California incentives associated with implementing advanced energy storage technologies and distributed generation, the addition of energy storage to CHP plants can drastically reduce the payback period below the 25 year expected economic lifetime of a plant. Thus thermal energy storage can make more CHP plants economically viable to build.

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