Evaluating a compressed air energy storage (CAES) system with high-temperature concentrated solar power (CSP): Techno-economic and sensitivity analysis

Abstract

This study assesses the novel integration of Compressed Air Energy Storage (CAES) with high-temperature air-based Concentrated Solar Power (CSP), enabling both electricity storage and generation, as well as supplying medium-temperature waste heat to nearby industrial processes. The proposed system is analyzed for a Chilean case study using detailed annual simulations and an updated techno-economic framework. A parametric analysis is conducted for plant sizes ranging from 1 to 400 MW e , including optimization of key design and operational variables. Results reveal a pronounced dependence of economic performance on plant scale, identifying that a 100 MW e plant achieves the most attractive economics under base-case assumptions, with an Internal Rate of Return (IRR) of 5.6% and a Levelized Cost of Electricity (LCOE) of 125 USD/MWh e . Sensitivity analyses further examine the influence of electricity price fluctuations and cost-reduction pathways, highlighting the critical importance of waste heat recovery. Comparative benchmarking against alternative storage solutions — adiabatic CAES (A-CAES), CSP with an electric heater, and Battery Energy Storage Systems (BESS) — demonstrates that the competitiveness of energy storage is highly context-dependent: no single technology consistently outperforms others across all scales and market conditions. While the IRR of CAES-CSP is slightly below the assumed discount rate under base-case assumptions, the proposed configuration shows particular promise for large-scale deployment in regions with high solar irradiance, significant electricity price variability, and nearby industrial heat demand. These results provide quantitative guidance for the design and deployment of CAES-CSP systems, positioning the technology as a potential solution for supporting the energy transition in specific use cases.