Compressed Air Energy Storage (CAES)

Program Overview

On November 24, 2009, the U.S. Department of Energy (DOE) awarded Pacific Gas and Electric Company (PG&E) a $25 million grant to fund initial work on a Compressed Air Energy Storage (CAES) project to support the utility’s increased use of intermittent renewable energy (e.g., wind, solar).  The grant was given under the American Recovery and Reinvestment Act (ARRA).  On January 21, 2010, the California Public Utilities Commission (CPUC) approved PG&E’s request for matching funds of $25 million for the project.  The CPUC found that the CAES demonstration project will provide PG&E with a better understanding of a promising energy storage technology, which has the potential to lower costs for customers and reduce greenhouse gas emissions through greater integration of renewable energy sources.  The California Energy Commission (CEC) has also shown support for the project with conditional approval of a $1 million grant.

PG&E is exploring this project in 3 primary phases:

Phase 1: Reservoir feasibility including site control, reservoir performance, economic viability, and environmental impacts. 

Phase 2: Commercial plant engineering, procurement and construction, and commissioning. 

Phase 3: Operations monitoring and technology transfer.  

Only Phase 1 is currently funded.  It is envisioned that at the end of this first phase, in the 4th Quarter of 2015, a decision will be made on whether to move forward with seeking the required regulatory approvals to proceed to Phase 2. This decision will be based on information learned in Phase 1.

The commercial-scale project has a nominal output capacity of 300 megawatts (MW) –similar to a mid-sized power plant- for up to ten hours. It is estimated that a commercial plant could come on-line in the 2020-2021 timeframe.

About CAES Technology

The proposed CAES project would use excess off-peak energy to compress air and inject it into a depleted natural gas reservoir and then use the compressed air to power a generator during peak periods when the energy is needed most.

California’s Renewables Portfolio Standard (RPS) will require PG&E, other investor-owned utilities, electric service providers, and community choice aggregators to increase procurement from eligible renewable energy resources to 33% of total procurement by 2020.  Storage facilities such as CAES will be increasingly important in managing the intermittent nature of renewable energy.  Energy storage will contribute to grid efficiency, reliability, and sustainability by compensating for the fluctuations in power output from intermittent renewable generators, like wind and solar plants.  It will also reduce the need to build additional fossil-fueled generation by shifting excess generation in periods of low demand to peak demand periods.


PG&E is fully committed to achieving California’s mandate of having 33% of its electricity demands met with renewable energy such as wind and solar energy by 2020. A key challenge to this ambitious goal is the intermittent nature of most renewable energy sources, as they often do not produce electricity when it’s needed by customers. Finding ways to store energy produced during times of low demand for use in times of high demand will enable more of these clean energy technologies to come onto the electric grid.
There are two compressed air energy storage plants in operation today, one in Alabama and the other in Germany, both of which have run safely and reliably for over 50 years combined. These plants use an underground cavern created in a salt formation. However, the type of salt formation needed for this application is not common in PG&E territory.

On the other hand, porous rock formations are common. Many feel that underground porous rock formations could be a suitable alternative to a salt formation. The type of porous rock formations we are considering are depleted natural gas reservoirs in the range of one half to one mile below the ground. The porous rock formations we are looking for typically are large sand deposits overlaid by an impermeable layer. Because the impermeable layer isolates the porous rock formation from shallower formations like fresh water acquifers, porous rock formations create an isolated pocket within which to store air.
PG&E was awarded a grant from the US Department of Energy (DOE), and matching funds from the California Public Utilities Commission (CPUC) to study the viability of using a porous rock formation as the storage vessel for compressed air. This type of project could have broad applicability across the US, in addition to the local California grid benefits described above. The goal is to demonstrate the technical, environmental, and economic feasibility of using this more commonly occurring reservoir for energy storage.

Contact the CAES Team


Mailing Address
Compressed Air Energy Storage
Pacific Gas & Electric Company
245 Market Street, Mail Code N13W
San Francisco, CA 94105

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