How Compressed Air Batteries are FINALLY Here

We can’t control the weather (yet). But we can control how we store weather-dependent renewable energy. So how do we snatch up our lightning in a bottle? Lithium-ion batteries can only go so far…and our historical large-scale go-to, pumped storage hydropower, only works in certain locations. What if we went in a different direction: down? By making use of geography like salt caves, former mining sites, and depleted gas wells, compressed air energy storage can be an effective understudy when wind or solar aren’t available. What’s better is that it has the potential to offer longer-duration storage that other technologies can’t for a lower capital investment and an out-of-sight…site.

If that weren’t enough, Canadian company Hydrostor is making big strides in commercializing a variation of compressed air energy storage that eliminates one of its critical weaknesses. This method has been years in the making, with researchers trying to breathe life into it for decades — but Hydrostor is one of a handful of companies igniting interest in further innovation.

Can compressed air change the energy storage game? Or is it just a little too niche?

If you haven’t noticed, we talk a lot about energy storage on this channel, and for good reason. It’s like the corner pieces of our renewables jigsaw puzzle: we can’t create a pretty picture without it. For example, our energy consumption tends to peak after sunset, which means that making the best use of solar requires squirreling it away for later.¹ We can’t fully rely on the whims of nature to power our lives 24/7, so we need a stable reserve to draw from as our plan B. Or perhaps a plan C-A-E-S: compressed air energy storage.

We briefly discussed this mostly underground tech a few years back, but recent developments in its worldwide deployment have sent compressed air rising back to the top of the news cycle. One of the important updates, on top of a spate of newly connected systems, is the potential debut of grid-scale, emissions-free CAES within the next few years. Yes, emissions-free. To understand what that means, let’s go spelunking — into how CAES works.

We’ll expand on the full process behind it later, but to compress the idea down for you, here’s the main gist. CAES systems convert the electrical energy produced by wind and sunshine into potential energy in the form of compressed air. You can think of CAES sites as being divided into two halves: above and below. Topside, there’s the machinery that runs the plant, where surplus electricity powers an air compressor.

Underground lies the storage, where the compressed air in question is pushed into and kept at a specific pressure. This is usually, but not always, inside a pre-existing structure like a salt cavern. It’s worth noting, though, that Hydrostor is opting to bring out the shovel for one of its upcoming projects by planning to dig a greenfield cavity. Whatever the site type, during discharge the air flows through an expander turbine that drives a generator to produce electricity.²³⁴

Compressed air has actually been drifting about for quite some time, with the 1978 Kraftwerk Huntorf project in Germany widely cited as the first in operation.⁵⁴ Part of what has kept CAES from picking up steam all this time though is, ironically, heat. Compressing air generates heat that you don’t want sticking around, but you also need heat to keep your turbines running properly during discharge.

The reason why heat is so essential to decompression in CAES systems comes back to thermodynamics. Air rapidly cools down as it expands, and that temperature drop can form condensation or freeze turbines.⁴ Hotter air also improves efficiency. Think about the handheld cans of compressed air used to clean computer gear…like this one here. The longer you hold the trigger, the colder the can gets. You can actually give yourself frostbite with one of these things. As frost starts to accumulate on the outside of the can, you can see the air slowing down.

Without a means of extracting the heat that you create from compression, it goes to waste…and that means falling back on fossil fuels to produce more heat down the line.⁴ I’m sure you can see right away how counterintuitive that is.

However, Hydrostor’s method enables its systems to have their compressed air and heat it, too, without the strings that usually come attached.³²⁴ Better yet, Hydrostor is just one of many groups contributing to the growth of emissions-free CAES. You could say compressed air is experiencing a bit of a windfall.

So how is compressed air evolving and why go for it in the first place? CAES provides discharge durations as long as 24 hours, and is one of the cheapest forms of long-duration energy storage (LDES) out there.⁶ Unlike with lithium-ion, enlarging a CAES facility brings down the per-unit price.² For lithium-ion, it’s an issue of scale. Most lithium-ion storage is designed for durations of four hours or less. While it’s technically possible to extend lithium-ion’s energy capacity, increasing the duration length directly translates into increasing system cost. In the words of S&P Global, that means it’s “unlikely to ever become economical or practical at durations above 12 hours or multi-day.”⁶⁷ It’s also a thrifty investment thanks to its low capital expenditure (capex) costs.⁶ Essentially, that comes out to significantly less money spent establishing and upgrading CAES plants.⁸

Here’s how those numbers shake out. According to BloomgbergNEF’s survey, based on projects delivered between 2018 and 2024, compressed air storage has one of the lowest capex costs of the LDES technologies included in the data: about $293 per kWh. For comparison, lithium-ion sits at an average capex of $304 kWh in 2023…but that’s specifically for four-hour duration systems.⁶ Interestingly, researchers at the U.S. National Renewable Energy Laboratory have observed that the capex for utility-scale lithium-ion storage decreases with longer durations…but the opposite is true for system costs (in terms of $ per kW).⁹ In the end, that comes out to lithium-ion being a progressively more expensive approach to LDES relative to CAES.⁶

Of course, cost is not the only consideration for energy storage. One of lithium-ion’s greatest strengths is its excellent round-trip efficiency (RTE). The RTE is a ratio of what you put into a storage system versus what you get out. The higher the RTE percentage, the less energy you’re losing over the course of charging and discharging.¹⁰

Lithium-ion batteries boast an average RTE of about 85%, with some systems at even higher efficiencies of 90% or more.¹¹¹² This beats out pumped hydro’s average RTE range of 70% to 87%.¹³ CAES, on the other hand, is not yet in that league. In a 2021 review of the technology, an international team of researchers concluded that in the context of a specific type of CAES (and we’ll get to what kind later), its estimated range of round-trip efficiencies is about 65% to 75%…but this figure has “not been practically confirmed to date.”⁴ CAES’ RTE tends to be even lower for older systems using a different method, which hovers at about 50% to 55%.²

CAES also has a much longer lifespan that lithium-ion.² We already know that Hydrostor’s promise of at least 50 years of service isn’t too unrealistic, considering the Huntorf station is still kicking at 46.¹⁴¹⁵²

It also doesn’t hurt that, like pumped hydro, compressed air is a mature technology with basis in already existing industries. There’s no innovation necessary for already standardized equipment like tanks and turbines, knowledge and infrastructure from fossil fuel and mining operations can be repurposed, and there’s opportunity to convert brownfield sites into viable facilities.⁴¹⁶²¹⁷

Again, there’s plenty of room for more PSH, but CAES has the convenient ability to take advantage of places like spent gas fields and greenfield aquifers. And even when you don’t have a cave to work with, you can always opt for canisters as your means of storage. Ultimately, CAES projects are not invulnerable to failure due to siting restrictions, but compressed air has more geographical flexibility than pumped hydro.²⁴

You might be wondering: where did CAES suddenly come from? Well, there’s been a lot of stirrings in the CAES space in the past year alone. Back in April, the 300 MW Hubei Yingcheng CAES plant first connected to the grid as part of a national pilot project in Hubei, China.¹⁸¹⁹ The following month, another 300 MW facility opened, this one developed by Zhongchu Guoneng Technology Co., Ltd. and located in Feicheng, China.²⁰ Over in the Netherlands, Corre Energy is partnering with Siemens — the very same German technology conglomerate you probably know for its wind turbines — as it gears up to establish two 320 MW plants, one in each company’s respective home countries.²

If any single company is on the CAES A-list, though, it would be Hydrostor…because it explicitly promises A-CAES, or advanced compressed energy storage…AKA AA-CAES, or “advanced adiabatic” CAES.²¹ Fun with initials. But what exactly is so advanced, here? The key letter “a” word here isn’t “advanced”…it’s “adiabatic.”

An adiabatic process is one that doesn’t involve any transfer of heat.²² Remember when I mentioned earlier that heat is one of CAES’ major obstacles? Most compressed air systems up until this point have been diabatic, therefore they do transfer heat — and as a result, they also use fossil fuels.² That’s because a CAES system without some sort of storage for the heat produced by compression will have to release said heat…leaving a need for another source of always-available energy to warm turbines during discharge. As a result, you end up with carbon emissions.⁴

But by combining CAES with thermal energy storage, it’s possible to capture the heat generated during compression and re-use it later during expansion. That way, there’s no need for an external, fossil-fuels based energy source to create more heat. Plus, adiabatic CAES has a much higher RTE, with a theoretical maximum of about 75%.⁴²

The concept of adiabatic CAES has been tinkered with for quite some time, with experiments starting as far back as the early 2000s.²¹ In 2014, researchers at the Chinese Academy of Sciences in Beijing completed one pilot plant that used water as its thermal storage medium, in Wuhu, China.²³ Two years later, Swiss company ALACAES tested another pilot plant in the Swiss Alps using a proprietary TES medium — but with a little twist. Rather than a salt cavern, the team took advantage of an unused railway transportation tunnel.²⁴

As you might have guessed by its name, Hydrostor has also selected water as its TES weapon of choice. It’s less that Hydrostor is setting itself apart via new technology and more that it just happened to be the company that won the race to debut a commercial adiabatic facility. Although, it’s definitely worth noting two things: 1. Companies fling around superlatives like “world’s largest” and “first” about as fast and loose as your typical YouTube comment section…and 2. Hydrostor’s Goderich, Ontario location is still very much a trial run. It’s successfully been in operation since 2019, but its peak power output tops out at only 1.75 MW.³²²⁵ In fact, during a recent interview the company’s president, Jon Norman, described Hydrostor like this:

“We are more a systems integrator with IP [intellectual property] on how we are integrating the system, rather than a new technology provider.”²

Hydrostor plans to prove its mettle on a larger scale through a series of upcoming projects: a 200 MW Australia facility in an old mine, and 500 MW United States facility in a newly dug greenfield cavity.² Earlier this year, Hydrostor announced its completion of another milestone in the permitting process for the Willow Rock Energy Storage Center in California. This follows the completion of the company’s large generator interconnection agreement between the Southern California Edison (SCE) utility and the California Independent System Operator (CAISO) last December.²⁶ The goal is to have the Silver City Energy Storage Centre in Australia operating by 2027, and Willow Rock ready to rock in 2030.²⁷

Up until very recently, there were only two large-scale commercial CAES plants in the world: Germany’s Kraftwerk Huntorf, and PowerSouth McIntosh in the U.S. state of Alabama, established 1991. Both are diabatic.²⁸⁴ When you combine this history with the broad lack of incentive to invest in long-duration energy storage, it would seem that A-CAES hasn’t had the chance to show us its A game.⁷ But as more and more interest in compressed air resurfaces, we might just find that it’s what we needed to keep us afloat all along.