The global average surface temperature is already about 1.2 °C above pre‑industrial levels, causing extreme weather events that pose a risk to humans, animals, and infrastructure.

The energy sector is one of the major drivers of pollution and global warming, with fossil fuel combustion being a primary source of greenhouse gas (GHG) emissions and air pollutants. This has led to the energy transition movement, which is a shift from fossil fuels to renewable energy sources, such as wind and solar.

The renewable energy transition is accelerating at a strong pace with an aim to create a zero-carbon energy system by 2050. 

The Rise of Renewable Energy – But with a Catch

Renewable power capacity saw a massive increase in 2024, reaching 4,448 gigawatts (GW), according to the International Renewable Energy Agency (IRENA). 

The addition of 585 GW last year actually represents a 92.5% share of the total capacity expansion and a record rate (15.1%) of annual growth.

“The continuous growth of renewables we witness each year is evidence that renewables are economically viable and readily deployable. Each year they keep breaking their own expansion records, but we also face the same challenges of great regional disparities and the ticking clock as the 2030 deadline is imminent.” 

– IRENA Director-General Francesco La Camera

Among the renewable energy types, solar energy saw the highest capacity expansion of 32.2%, reaching 1,865 GW. In this, solar photovoltaics increased by 451.9 GW last year, with China alone adding 278 GW to the total expansion, followed by India at 24.5 GW.

Solar energy was followed by wind energy, which grew by 11.1%, though the expansion declined a bit to reach a 1,133 GW capacity. This expansion was dominated by China and the US.

The hydropower capacity, excluding pumped storage hydropower, climbed to 1,283 GW, again driven by China. Bioenergy also increased by 4.6 GW of capacity, with both China and France making 1.3 GW of additions each. New Zealand led the geothermal energy expansion, which increased by 0.4 GW overall.

While renewable energy sources offer a promising way to advance energy transition, green energy like wind and solar is intermittent in nature. This requires better ways to store energy for later use.

As a solution, researchers at Penn State have proposed repurposing depleted oil and gas wells for geothermal-assisted compressed-air energy storage (GA-CAES), which can potentially enhance the efficiency of energy storage systems by 9.5%.

According to the study’s corresponding author, Arash Dahi Taleghani, who is a professor of petroleum and natural gas engineering at Penn State:

“The problem is that sometimes when we need energy, there is no sunshine or there is no wind. That’s a big barrier against further expansion of most of the renewable energy that is available to us. That’s why it’s very important to have some storage capacity to support the grid.”

Large-scale and Long-duration Energy Storage Solution

Energy storage is key to a stable, reliable, and sustainable energy system. By capturing the energy produced for later use, it enables the integration of intermittent renewable sources, improves grid stability, and maximizes the utilization of wind and solar power. It further reduces reliance on fossil fuels, in turn reducing greenhouse gas emissions.

This isn’t all. Energy storage promotes energy resilience during extreme weather events and supports the transportation sector’s electrification. It is also essential in expanding access to energy in remote areas and creating economic opportunities. 

So, energy storage is critical in achieving a sustainable and clean energy future. Now, there are different ways to store energy, with Compressed Air Energy Storage (CAES) being one of them.

CAES, as the name suggests, is a technology that compresses air and stores it. The way it works is that when electricity demand is low, surplus energy is utilized to compress air and then stored in tanks or underground. When electricity demand is high, the compressed air is released to power a turbine and generate electricity. 

The technology has been seriously investigated and commercially available for more than half a century now, thanks to its ability to store significant amounts of energy for long periods of time.

Besides offering large-scale and long-duration storage, CAES systems can easily be scaled to meet different energy storage needs. Also, it uses clean and readily available air, which makes it a green energy storage tech. As a result, CAES is attracting growing interest from investors, utilities, and governments.

Of course, there are drawbacks in terms of lower round-trip efficiencies, slower response time, and high capital cost. As a result, research in this area focuses on improving the efficiency and cost-effectiveness of CAES systems. 

The latest research, supported by the U.S. Department of Energy, focuses on increasing the economic efficiency of CAES.

A New Approach to Green Energy Storage

Large-scale energy storage methods like CAES have been attracting a lot of attention to better balance the energy supply and demand.

Over the past few decades, CAES technologies have matured significantly and several CAES facilities have been constructed. For instance, Bethel Energy Center projects (324 MW) and the Mclntosh CAES plant (110 MW) in the US.

Most of the existing CAES plants, however, are diabatic, noted the new study, published in the Journal of Energy Storage.

This means they lose heat during compression and have no reuse option. Moreover, using fossil fuels to expand air causes additional GHG emissions and reduces system efficiency.

While A-CAES (adiabatic compressed air energy storage) solves this problem by storing the heat generated during compression and reusing it before expansion, there are only a limited number of such pilot plants due to its higher initial investment and the need for high-pressure containers with a large volume capacity for highly efficient air storage.

So, the research investigated the viability of incorporating abandoned oil and gas wells (AOGWs) in CAES development using conceptual, mathematical, and numerical models to solve the problem.

According to the Environmental Protection Agency (EPA), there are an estimated 3.9 million such depleted wells, offering a massive opportunity. 

The increasing number of orphan wells usually lack appropriate maintenance and monitoring and present a high risk for greenhouse gas leakage, underground water pollution, and soil contamination.

To address this problem, the US government has made several efforts, including $560 million awarded to 24 states to plug, cap, and reclaim these wells. The Infrastructure Investment and Jobs Act (IIJA) also allocated $4.75 billion to remediate and monitor these wells across the nation.

However, despite the efforts, these AOGWs remain a big challenge for the government. Reusing these orphaned wells as assets for renewable energy and integrating them into the energy transition presents a solid solution to this problem.

After all, these underground spaces offer several unique advantages, such as stability and natural insulation, that make them ideal for various energy storage technologies. Repurposing them revitalizes abandoned sites, reduces the carbon footprint of energy production, and can even be integrated with other energy systems.

The research proposes using these abandoned wells as inexpensive CAES containers by sealing and converting their structure. It also proposes using underground geothermal heat to further heat the stored air and increase its pressure.

The research was conducted as part of Penn State’s Repurposing Center for Energy Transition (ReCET), which seeks to repurpose existing fossil energy infrastructure for energy transition applications, especially in legacy energy communities.

A Win-Win Solution for All Stakeholders

With the startup costs limiting the commercial development of CAES plants, the scientists proposed the geothermal-assisted compressed-air energy storage system using abandoned oil and gas wells, which they found can improve efficiency by 9.5%.

This means a greater amount of energy stored in them can be recovered and turned into electricity.

“This improvement in efficiency can be a game changer to justify the economics of compressed-air energy storage projects. On top of that, we could significantly avoid the upfront cost by using existing oil and gas wells that are no longer in production. This could be a win-win situation.”

– Taleghani

Reusing these wells, which have lost their economic viability for producing oil or gas, would enable operators to access geothermal heat in hot rock formations underground. This will eliminate the heavy upfront costs of drilling new wells, potentially boost their profits, and make the technology more appealing.

According to the research, repurposing the preexisting facilities improves economic viability,, and using the geothermal energy from the surrounding reservoir further increases system efficiency. 

Another advantage of using these heated wells is that they could potentially store more energy because as temperature increases, compressed air increases in pressure. The team used numerical modeling simulations to find that putting CAES systems in these orphaned wells substantially enhances the temperature of the air in the systems. According to Taleghani:

“Without taking advantage of the geothermal setup, you could not get enough encouraging numbers.” 

Moreover, “drilling new wells may not justify the economics of this type of storage. But by combining these two factors, and by going back and forth through modeling and simulation, we found this could be a very good solution,” Taleghani added. 

Besides helping CAES play a key role in the clean energy transition by addressing the problem of the intermittent nature of renewable sources, reusing orphaned oil and gas wells can also aid in mitigating the environmental impacts of depleted wells. 

Repurposing can further provide new employment opportunities in regions with rich energy industry traditions. Pennsylvania is a good example, with an estimated 300,000 such abandoned wells.

Damage to these wells or improper plugging of them can leak methane into the atmosphere and groundwater. So, the repurposing proposal by researchers is “basically hitting two birds with one stone.”

“First, we are sealing these wells. That stops any potential leaks. And then if we are repurposing these wells for energy storage, we are still using the infrastructure that is in place in these communities. It can potentially maintain employment in the area and allow communities to be part of the energy future.” 

– Taleghani

As for the real-world application of the approach that could provide a cost-effective and sustainable method for storing renewable energy by utilizing existing infrastructure, the implementation could begin within the next 5 to 7 years, pending further research and regulatory approvals.

Innovative Company

NextEra Energy, Inc. (NEE +0.43%)

A leading clean energy company, NextEergy is headquartered in Florida and invests in renewable energy generation and advanced energy storage solutions, including CAES technologies. 

NextEra Energy owns Florida Power & Light Company (FPL), America’s largest electric utility. FPL provides clean, affordable, reliable electricity to about 12 million people across Florida. Last month, FPL submitted a four-year request to the Florida Public Service Commission (PSC) to set new rates once its current base rate agreement ends this year. 

As per the proposal, starting in 2026 through 2029, the usual 1,000-kWh bill of a residential customer would be about 20% lower than it was two decades earlier when adjusted for inflation. Meanwhile, small- and medium-sized business customer bills would increase at an average annual rate of 1% to 5%.

Next Energy’s clean energy business — NextEra Energy Resources — is the largest generator of renewable energy from the sun and wind, along with battery storage. The company also generates clean electricity from its commercial nuclear power plants. There are a total of seven such units spread across New Hampshire, Wisconsin, and Florida.

As for company financials, Next Energy, which has a market cap of $143.4 billion, reported net income on a GAAP basis at $1.203 billion, $0.58 per share, for the fourth quarter of 2024 and $0.53 per share on an adjusted basis.

For the full year 2024, net income on a GAAP basis was $6.946 billion, or $3.37 per share, and adjusted earnings were $7.063 billion, or $3.43 per share, which was an increase of more than 8% from the previous year.

“NextEra Energy had an excellent year of execution in 2024,” said CEO John Ketchum, as he noted generating more electricity as well as investing more in energy infrastructure than any other company in the U.S. 

In 2024, the company placed about 8.7 gigawatts of new renewables and storage projects into service. CEO Ketchum stated:

“With experience in every part of the energy value chain. NextEra Energy is well positioned to capitalize on the opportunity set that lies ahead and the increased power demand that is happening now in the U.S.”

As of writing, NEE shares are trading at $69.73, down 2.73% YTD. The dividend yield paid by the company is pretty attractive, though at 3.25%.

Earlier this year, the company announced its plans to expand its natural gas and nuclear generation to meet the surging demand for electricity. The AI boom has been the biggest driving factor for the significant increase in US power consumption, in addition to the increasing electrification of the economy. This has created a demand for new gas plants and rekindled interest in nuclear energy.

To fulfill this demand, NextEra Energy has partnered with $87.65 bln market cap GE Vernova (NYSE: GEV). According to GE Vernova, data centers prefer gas over wind and sun, with gas turbine orders more than doubling to 20 gigawatts last year and expecting to be even stronger this year, because they need power around the clock. 

With the help of the gas turbine manufacturer, the company will cater to data centers’ power needs. 

“The idea would be to go after and target large-load customers and do it in an integrated way where we can combine gas-fired generation with renewable and battery storage.”

– Ketchum said back in late January

NexEra has also begun the restarting process of its Iowa-based nuclear power plant, Duane Arnold Energy Center, which was shut down in 2019. For this, it has filed a request with the US Nuclear Regulatory Commission for a licensing change and aims to get it up and running by the end of 2028.

Last summer, the NextEra Energy Foundation also funded the $1 million AI-enabled center from Florida Atlantic University’s College of Engineering and Computer Science. The project has wall-to-wall screens, replicating FPL’s smart grid for severe weather events.

Back in April, Ketchum had also shared the potential for the renewables and energy storage market to triple in size over the next seven years compared to the previous seven, driven by rising demand from the construction of data centers.

Data center developers want low-cost energy, a contribution to decarbonization, and the right location for speed to market. Beyond that, chip manufacturing and the oil and gas industry are also electrifying, leading to “significant electric demand.”

Latest on Next Era Energy, Inc.

Conclusion

The journey to net-zero emissions involves renewable energy as a critical component that can help reduce fossil fuels by providing clean sources of energy. The clean and green energy revolution, however, needs promising large-scale energy storage solutions.

While compressed-air energy storage (CAES) offers the solution, it has its own problems in terms of low efficiency and high cost. But the latest research offers an innovative approach to significantly decrease initial investment and increase efficiency.

Repurposing abandoned oil and gas wells for energy storage applications and integrating geothermal energy into the system further increases the efficiency and on top of that reduces the environmental impacts.

This novel arrangement represents a significant advancement in sustainable energy solutions, offering a pathway towards achieving cleaner and more profitable CAES systems and a more resilient and environmentally friendly energy future!

Click here for a list of top renewable energy stocks.