Compressed-air and CO2 storage: Economics

Among the cheapest long stores, if someone signs a contract

What this tab covers Economics and financial structure: capital versus operating cost, levelised cost of storage, and how the asset earns money.

CAES is among the cheapest options for 8 hours and longer, but projects are large and lumpy and need long contracts or state backing.

Capex versus opex

Favourable

Chinese adiabatic plants are cheap by Western standards: Feicheng cost CNY 1.496 billion (about USD 206 million) for 300 MW / 1,800 MWh, about USD 690 per kW or USD 115 per kWh (calculated), and its developers say unit cost is over 30 percent lower than at 100 MW scale. Yingcheng cost CNY 1.95 billion (USD 270 million), about USD 900 per kW or USD 180 per kWh (calculated). Western first plants cost far more: Willow Rock (500 MW / 4,000 MWh) was reported at about USD 1.5 billion, roughly USD 3,000 per kW or USD 375 per kWh (calculated), with a DOE conditional loan guarantee of up to USD 1.76 billion (USD 1.5 billion principal plus capitalised interest). Hydrostor plans about AUD 550 million of spending in New South Wales for Silver City. IRENA's 2017 figure of about USD 50 per kWh of storage, possibly USD 40 where a reservoir already exists, is a useful floor for the energy component. Opex covers turbomachinery maintenance and, for diabatic plants, gas.¹³⁴⁷¹²¹³¹⁸

Feicheng capex USD 206 million (about USD 115/kWh, calculated)¹³ Yingcheng capex USD 270 million (about USD 180/kWh, calculated)¹ Willow Rock reported cost about USD 1.5 billion (about USD 375/kWh, calculated)¹⁸ Silver City NSW spend about AUD 550 million¹² Willow Rock DOE loan guarantee up to USD 1.76 billion³⁴ IRENA energy cost (2017) about USD 50/kWh (USD 40 with existing reservoir)⁷

Levelised cost of storage

Favourable

For a 1,000 MW, 10-hour plant DOE/PNNL 2022 estimates about USD 0.10 per kWh (USD 100 per MWh), the lowest of the technologies it compared at that size, slightly below pumped hydro at USD 0.11.⁶

LCOS, 1,000 MW / 10 h about USD 100/MWh (2021 cost basis)⁶

Revenue stack and market participation

Mixed

Plants earn from daily arbitrage, capacity and reliability contracts and spinning reserve, since turbines provide inertia. Willow Rock has a 25-year contract with Central Coast Community Energy for 200 MW of its 500 MW. Yingcheng plans about 330 full cycles a year, consistent with daily shifting (498 GWh charged over 1.5 GWh capacity, calculated). At Energy Dome's 20 MW / 200 MWh Ottana plant, ENGIE dispatches the output in Italian power markets under an offtake deal (commissioning was planned for early 2025), and Google has made an undisclosed investment to develop CO₂ Battery projects (company announcements). Silver City reserves 50 MW / 250 MWh as backup supply for Broken Hill during network outages.¹³⁸¹⁰¹¹

Willow Rock offtake 200 MW, 25 years³ Yingcheng cycles about 330 per year (calculated)¹ Silver City backup reserve 50 MW / 250 MWh¹¹

Sources

'World's largest' compressed air energy storage project connects to the grid in China Energy-Storage.news, 2024
Hydrostor gets $1.76B DOE conditional loan guarantee for compressed air energy storage Utility Dive, 2025
US DOE offers US$1.76 billion loan to Hydrostor for A-CAES California project Energy-Storage.news, 2025
2022 Grid Energy Storage Technology Cost and Performance Assessment US Department of Energy / Pacific Northwest National Laboratory, 2022
Electricity Storage and Renewables: Costs and Markets to 2030 IRENA, 2017
Google backs Italian long duration CO2 energy storage technology RenewEconomy, 2025
Energy Dome and ENGIE sign pioneering storage offtake agreement Energy Dome via Business Wire, 2024
Hydrostor secures grid connection for first Australian CAES project ESS News, 2026
Silver City Energy Storage Centre Hydrostor, 2026
World's largest compressed air energy storage power station launched China Daily (Shandong), 2024
Hydrostor prepares to break ground on first utility-scale project in California The Globe and Mail, 2025