In compressed air energy storage, (CAES), surplus energy is used to compress air for subsequent electricity generation. In CAES facilities, air is compressed and is stored under high pressure in underground caverns. CAES is an alternative to pumped hydro since it has relatively high power output and storage capacity. However, with CAES, instead of pumping water to an upper reservoir when the electricity supply is high, atmospheric air is compressed and stored in underground facilities under high pressure. When the demand for electricity is high, the stored air is heated (by heat recuperation or natural gas) and expanded and led through a turbine driving a generator, which is used for electricity production.
Compressed-air energy storage plants can take in the surplus energy output of renewable energy sources during times of energy over-production. This stored energy can be used at a later time when demand for electricity increases or energy resource availability decreases. Compressing and decompressing air introduces energy losses, resulting in an electric-to-electric efficiency of only 40-50%. Compression of air creates heat; the air is warmer after compression. Expansion requires heat. If no extra heat is added, the air will be much colder after expansion. If the heat generated during compression can be stored and used during expansion, efficiency improves considerably.