Compressed air energy storage (CAES) is a unique in its ability to efficiently store and redeploy energy on a large scale in order to provide low-cost energy and enhance grid reliability. A CAES power generation facility uses electric motor-driven compressors to inject air into an underground storage cavern and later releases the compressed air to turn turbines and generate electricity back onto the grid. Suitable storage media can include underground salt dome caverns, depleted oil/gas reservoirs, underground aquifers, or in certain cases abandoned underground hard rock mines. Compression normally occurs during offpeak hours, when power prices are low. During hours of high electric demand, compressed air is withdrawn from the cavern, preheated, and introduced to one of several combustors. In the combustors, natural gas is fired to further heat the air, and the hot, expanding gases are used to drive expansion turbines. These turbines are connected to a generator, which produces electricity for the grid.

For a further explanation of CAES operations, take a look at this video.

Two key dynamics – market evolution and CAES project design advancements – have dramatically boosted the CAES value proposition, making it the most attractive new-build electric generation solution for serving intermediate load.

ERCOT market evolution strongly supports CAES economics…

• Significant additions of intermittent renewable resources increase demand for Ancillary Services

• Projected natural gas price escalation will lead to higher power and ancillary service prices

• Organized and liquid wholesale energy and ancillary service markets allow CAES to compete with
traditional generation to provide valuable grid services

• Utilities and retail electric providers require energy and ancillary services hedges to
manage commodity risk and reduce costs