China Brings Online the Largest Compressed-Air Energy Storage Project

China has commissioned a major compressed-air energy storage installation designed to absorb surplus generation and release it during demand peaks, signalling a clear shift toward diversified long-duration storage. The facility stores energy by compressing air into an underground cavern or reservoir and later converting that stored pressure back into electricity, providing hours-long discharge capability that complements fast-response batteries. Policy drivers include rising shares of wind and solar on provincial grids, the desire to curb curtailment, and a national agenda to deepen grid flexibility without depending solely on lithium-ion systems. Technically, compressed-air systems scale differently from electrochemical batteries: they rely on geological siting, mechanical turbomachinery, and heat-management systems, which affect costs, round-trip efficiency, and operational profiles. For grid operators, the plant offers a new tool for multi-hour balancing, capacity firming, and providing ancillary services over longer horizons than typical battery arrays. Economically, wide deployment could compress the marginal value of short-duration storage while creating a competitive alternative for seasonal and multi-hour applications, changing procurement strategies for utilities and planners. Export potential is notable; China’s experience in building and integrating a large CAES unit could translate into equipment manufacture and turnkey projects overseas, especially where geology and grid needs align. Risks remain: geological constraints limit siting options, conversion efficiency lags behind some battery systems, and long-term maintenance of pressure vessels and compressors will shape lifecycle costs. Environmental and regulatory oversight will matter because underground storage interacts with land use, groundwater and seismic considerations that local authorities must manage. Strategically, the move advances China’s ability to weave variable renewables into a reliable power mix while reducing pressure on battery raw material supply chains. Market participants should expect procurement and rate-design conversations to shift toward recognizing multi-hour storage value, and financing structures will need to reflect different risk and performance profiles than those used for batteries. In sum, bringing a large compressed-air installation online is both a technical experiment at scale and a policy statement: it expands the toolbox for deep decarbonization and could accelerate competition among long-duration storage technologies.