While Hydrostor Waits for Washington’s Check, the Chinese Academy of Sciences Has Already Doubled Compressor Capacity

Around the same time, two things happened on the other side of the Pacific. On January 9, the 300 MW-class compressed air energy storage plant “Nengchu No. 1” in Yingcheng, Hubei Province achieved full-capacity grid connection, becoming the world’s largest operating plant of its kind. On February 5, the Institute of Engineering Thermophysics at the Chinese Academy of Sciences announced that its jointly developed compressor with China Energy Storage Group had broken the 100 MW single-unit threshold, reaching 101 MW with 88.1% efficiency, entirely based on domestically owned intellectual property.

Yingcheng, Hubei is a salt-producing region with a long mining history, and the ground beneath it is riddled with mined-out salt caverns. “Nengchu No. 1” uses these caverns as air storage reservoirs. The principle is straightforward: when electricity is abundant, compressors pump air into underground salt caverns for storage; when power is tight, the high-pressure air is released to drive expansion turbines and generate electricity. The heat generated during compression is captured and stored separately, then used to preheat the air during discharge. Working medium is just air. No lithium. No cobalt. Salt cavern walls are dense and pressure-resistant. Thirty years of operation won’t produce the kind of capacity degradation you see in lithium batteries.

Total storage capacity is 1,500 MWh, with a daily cycle of 8 hours charging and 5 hours discharging, producing roughly 500 GWh of electricity per year. All key equipment is 100% domestically manufactured. The reason this matters: there were simply no off-the-shelf suppliers for core compressed air energy storage equipment anywhere in the world. Huntorf and McIntosh used modified conventional gas turbines that were never designed for adiabatic storage. On the Chinese side, everything from compressors to expansion turbines to thermal storage systems had to be developed from scratch. Shaanxi Blower (SBW) makes compressors, Shenyang Blower Works handles expansion turbines, Dongfang Electric does system integration.

Germany built Huntorf in 1978 and the U.S. built McIntosh in 1991. Both require natural gas to assist expansion, and neither exceeds 50% efficiency. After those two, nobody cracked this path for decades. The core bottleneck: when air is compressed, temperatures rise to several hundred degrees. If that heat is simply dissipated, the air isn’t hot enough during expansion to generate electricity efficiently. The Institute of Engineering Thermophysics at the Chinese Academy of Sciences started working on this in 2004 and proposed an advanced adiabatic approach in 2009, storing all the heat generated during compression in a thermal storage system and releasing it during expansion, without burning a single cubic meter of natural gas. System efficiency jumped from Huntorf’s roughly 42% to above 60%, and was later pushed to around 70%.

The 300 MW system at “Nengchu No. 1” uses multiple smaller compressors in parallel. Previously, the world’s largest single compressed air energy storage compressor was in the roughly 50 MW range. A 300 MW system needed at least five or six units in parallel. 101 MW doubles single-unit capability in one step. A 300 MW plant can now be covered by three units. For a 660 MW-class project, where you might have needed a dozen units before, six or seven now suffice.

Each unit you don’t install saves more than just the equipment procurement cost. It saves the associated piping, valves, foundation civil works, control cabinets, and cabling. Running multiple units in parallel also creates a problem that non-specialists rarely notice: load distribution and coordinated control between units. When one unit faults, redistributing load across remaining units, rebalancing pipeline pressure, all makes the control system’s complexity grow not linearly but exponentially with the number of units.

88.1% refers to the mechanical efficiency of the compression stage itself. This is different from the round-trip electrical efficiency of the entire storage system, which accounts for losses across the full chain of underground storage, heat exchange, and expansion generation. The best publicly reported round-trip figures are around 70%. Put in 100 units of electricity, get back 70.

China’s salt mineral resources are concentrated in a handful of provinces: Hubei, Shandong, Jiangsu, and Henan. The regions with the highest wind and solar installations and the greatest curtailment pressure — Inner Mongolia, Gansu, and Xinjiang — have virtually no usable underground salt caverns. A 300 MW project under construction in Jiuquan, Gansu is experimenting with engineered rock caverns as an alternative, excavating large chambers directly in granite or other hard rock. Excavation costs at least double. The places that need energy storage most are the very places without natural storage containers.

China’s infrastructure project completion rate is not as high as the numbers on paper suggest. Of those 448 companies engaged in compressed air energy storage, how many have built something that actually runs and how many registered just to chase local subsidies? Nobody has ever tallied that up. Cases where local governments rush to claim storage projects, cutting corners on geological surveys and economic feasibility studies, number more than one or two.

The U.S. side isn’t idle either. The DOE’s “Long Duration Energy Storage Shot” initiative targets a 90% reduction in long-duration energy storage costs by 2030. Combined financing for Hydrostor, Form Energy, and others is not insignificant. It’s just that every step from financing to permits to supply chain buildout is constrained by political cycles and capital markets’ short-term preferences.

The most fundamental issue for CAES right now is cost. Per-kWh construction costs remain higher than pumped hydro. Compared with lithium batteries, compressed air has zero advantage for durations under four hours. For durations above eight hours, there’s a cost crossover point, but that keeps getting pushed out as lithium battery prices continue to fall. A 70% round-trip efficiency compared to lithium’s 90%+ is a 20-percentage-point gap. Putting those two numbers side by side isn’t entirely fair though. Lithium batteries are efficient and fast-responding for two-to-four-hour short-duration storage. After a few thousand cycles, capacity starts dropping. Replacement after ten years. Fire risk. Supply chain pressure on lithium, cobalt, nickel. Compressed air energy storage is positioned for eight-plus-hour long-duration storage, with single-plant capacities at the gigawatt-hour scale and thirty-year lifespans.

The entire industry still runs heavily on policy. Local government storage quotas, central subsidy levels, ancillary service pricing mechanisms in electricity markets — these policy variables determine whether a project gets built. The true market-driven inflection point hasn’t arrived. Many projects getting built today owe their existence to local governments mandating that new renewable energy projects include a certain percentage of co-located storage. Whether the storage plant itself turns a profit is sometimes not the first consideration.