Economic Feasibility of Kite-Based Wind Energy Powerships with CAES or Hydrogen Storage

FCN Working Paper No. 16/2012

38 Pages Posted: 21 Mar 2013

See all articles by Matthias Schmitz

Matthias Schmitz

RWTH Aachen University

Reinhard Madlener

RWTH Aachen University

Date Written: December 1, 2012

Abstract

The rise in the usage of sustainable energy conversion technologies has been remarkable. However, the growth of these technologies poses several problems, mainly concerning the net integration of intermittent energy sources, like wind and solar power, by means of advanced storage systems and the land consumption the use of these energy sources implies. Furthermore, the economic viability of these solutions is in question, as they are to date still often heavily supported by financial subsidies. The Powership concept attempts to tackle these shortcomings by harvesting wind energy offshore using an alternative infrastructural approach which features a special-purpose ship towed by a high-flying kite. The ship’s resulting kinetic energy is partially converted by a water repeller and can either be used to compress and store air in steel tubes (Alternative 1) or to drive a generator which in turn delivers electrical energy to produce hydrogen (Alternative 2). In this study, the economic feasibility of each of the two alternatives is investigated and compared with the other using real options analysis, including both R&D and market risks as stochastic variables driving the option’s value. In order to determine the strategic value of managerial flexibility in the face of uncertainty, assumptions concerning the change of the economic environment are made and motivated.

Keywords: Wind power, kite, CAES, hydrogen, real options analysis, Monte Carlo simulation

Suggested Citation

Schmitz, Matthias and Madlener, Reinhard, Economic Feasibility of Kite-Based Wind Energy Powerships with CAES or Hydrogen Storage (December 1, 2012). FCN Working Paper No. 16/2012. Available at SSRN: https://ssrn.com/abstract=2236279 or http://dx.doi.org/10.2139/ssrn.2236279

Matthias Schmitz (Contact Author)

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustraße 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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