According to EPRI's energy storage expert, Rich Lordan, "CAES (Compressed Air Energy Storage) is going to be important."  (EPRI is the Electric Power Research Institute).

EPRI's take on CAES and some background on the technology can be found in this recent GTM article.  
Hal LaFlash, Pacific Gas & Electric's Director of Emerging Clean Technology Policy, spoke on an energy storage panel last week and added a few more pieces of the storage puzzle as it is seen by a major utility.  PG&E is looking forward to exploring the 300 megawatt CAES project in Kern County.

Hal pointed out that we're going to need help managing the 4,500 megawatts of new wind coming online in California in 2012 from the Tehachapi Pass Wind Project

Mr. LaFlash noted that there is already 1,200 megawatts of pumped hydro storage in the mountains above Fresno and that it is "an essential element of the grid in California."

The U.S. DOE and PG&E are still working on the details and site information on the Kern County project. 

According to a recent presentation by PG&E Senior Director Andrew Tang, the 300 megawatt - 10 hour plant is suitable for California’s porous rock formations and has a 5-year development lead time for:

  • Economic and geotechnical analysis
  • Core drilling
  • Siting, permitting and construction

Note the "porous rock formation" remark made by Tang.  The few CAES projects to date have used salt domes, but there is now a movement towards storing the compressed air in a porous rock structure.  According to LaFlash, "These structures are used every day for natural gas storage."  Hal also mentioned that natural gas is only cycled a few times a year, while CAES energy storage will be cycled daily.  That could present some technical challenges.

Investigations by EPRI indicate that up to 80 percent of the U.S. has geology suitable for CAES. A single 300 megawatt CAES plant would require 22 million cubic feet of storage space -- enough to store eight hours’ worth of electricity.

In the above chart, regions with geology favorable for CAES and class 4+ winds are superimposed to indicate promising CAES plant locations. Source: “Compressed Air Energy Storage: Theory, Resources, and Applications for Wind Power,” Samir Succar and Robert H. Williams, Princeton University (published April 8, 2008)

The conclusion is that there is room for hundreds of 300 megawatt CAES plants across the U.S.

Another proposed, albeit smaller-scale compressed air project (co-located with a wind farm) is the Iowa Stored Energy Park

It's not exactly high-tech, and it may not be the holy-grail materials breakthrough that VCs and entrepreneurs are seeking -- but it's relatively inexpensive and it's here today.  And it can turn intermittent renewable energy sources like wind into more reliable dispatchable power.