Alberta is building Canada’s first commercial-scale compressed air energy storage plant. Here’s why it matters for long-duration storage and net-zero grids.
Most grids hit the same wall: wind and solar are cheap, but they don’t show up on demand. Alberta is now betting that compressed air energy storage (CAES) can help fix that problem at serious scale.
Cache Power, a project company backed by Federation Engineering, is planning what’s being billed as Canada’s first commercial-scale CAES facility next to the Marguerite Lake substation in Northeast Alberta. We’re not talking about a small pilot. We’re talking hundreds of megawatts and up to 48 hours of stored energy—exactly the kind of long-duration storage grids need as fossil plants retire.
This matters for anyone working in green technology, clean energy investing, or decarbonisation strategy. Long-duration storage is the missing middle between lithium-ion batteries and traditional generation. Alberta’s CAES project is a real-world test of how large-scale storage, hydrogen, and smart engineering can support a net-zero electricity system while still keeping the lights on and the economy running.
In this post, I’ll break down what’s actually being built, how this type of storage works, why it’s different from both batteries and older CAES plants, and what it means for utilities, developers, and businesses planning for a low-carbon future.
What Cache Power Is Building in Alberta
The Cache Power project is designed as a commercial-scale CAES power plant tied directly into Alberta’s grid at the Marguerite Lake substation.
Here’s the core of the project:
- Location: Northeast Alberta, beside the Marguerite Lake substation (for efficient grid integration)
- Load capacity: 250 MW (power drawn from the grid to compress air)
- Generation capacity: 640 MW (power output when discharging)
- Storage duration: Up to 48 hours of energy storage
- Total energy capacity: ~30.72 GWh, according to project leadership
That combination—hundreds of megawatts and multi-day duration—puts this firmly in the long-duration energy storage (LDES) category. It’s built to run not just for a few hours in the evening peak, but to cover long stretches of low wind or sun.
The facility will be constructed in two phases, which is a smart risk and financing move:
- Phase 1 can be optimized for early revenue, learning, and integration with Alberta’s existing market.
- Phase 2 can scale capacity once the operational model is proven and revenue streams are clearer.
From a green technology perspective, this is exactly the kind of project that shows where the market is heading: large, dispatchable, low-carbon storage that supports renewables without depending solely on batteries.
How Compressed Air Energy Storage Actually Works
CAES is pretty straightforward conceptually: you store energy as compressed air, then release it later to run a turbine and generate electricity.
Basic CAES process:
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Charging (storing energy)
- When the grid has excess electricity (e.g., windy nights, low demand), compressors use that power to pressurize air.
- The compressed air is injected into underground salt caverns formed via solution mining. These caverns are naturally strong and can safely hold high-pressure air.
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Storage
- The air stays underground, under high pressure, until the grid needs power.
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Discharging (producing energy)
- When demand spikes, the compressed air is released.
- It passes through a heating and expansion system and spins a turbine generator, which feeds power back into the grid.
Cache Power’s system is based on modern D-CAES (diabatic CAES) technology from Siemens Energy. Older CAES plants from the 1970s–1990s often recovered less than 50% of the input energy. A lot of the heat from compression was just wasted.
Here’s what’s different now:
- Multi‑stage, integrally geared, intercooled compressors reduce the heat of compression, improving efficiency and lowering wasted energy.
- 90% effective dual‑reheat recuperators in the expander trains significantly boost overall cycle efficiency compared with classic CAES designs.
So while people often quote that “CAES is under 50% efficient,” that’s outdated. The Alberta project is explicitly not using the old Huntorf (Germany, 1978) or McIntosh (USA, 1991) style definition of “conventional CAES.” It’s using more advanced thermal management and turbomachinery.
From a grid-operator standpoint, the result is a plant that behaves very similarly to a flexible thermal generator—but fueled by stored air and low-carbon fuels, not just natural gas.
CAES vs Batteries vs A-CAES: What’s the Difference?
The reality? These technologies solve different problems.
Where CAES Shines
CAES is particularly strong in a few areas:
- Long-duration storage: 8–48 hours is achievable at scale. Batteries can do this, but costs escalate fast for that much energy capacity.
- Bulk energy shifting: Perfect for shifting whole days of wind and solar, not just smoothing hourly fluctuations.
- Use of existing geological formations: Salt caverns are relatively low-cost per unit of energy stored compared with massive battery fields.
For green technology strategy, think of CAES as a backbone asset: you use it to anchor a system that includes batteries, demand response, and renewable energy.
How It Compares to Lithium-Ion Batteries
Batteries excel at:
- Fast response (seconds to milliseconds)
- Frequency regulation and ancillary services
- Short-duration peaks (1–4 hours)
- Distributed deployments (rooftops, behind-the-meter, EVs)
CAES excels at:
- Multi-hour to multi-day durations
- System-level reliability and resource adequacy
- Large, centralized plants integrated at transmission level
In practice, a decarbonized grid will need both. If you’re planning a portfolio, you don’t replace batteries with CAES; you stack them.
What About A-CAES (Advanced Compressed Air)?
Hydrostor, an Ontario-based developer, has made a name with advanced compressed air energy storage (A-CAES). It works similarly to CAES but captures and stores the heat from compression in pressurized hot water. Later, that heat is reused in the expansion stage.
A-CAES features:
- Higher round-trip efficiency compared with classic CAES, because the thermal energy is reused.
- Hydrostatic compensation using water to maintain stable cavern pressure during operation.
Hydrostor already operates smaller projects in Canada, including a 2.2 MW / 10 MWh commercial system in Goderich, Ontario, and is developing very large projects like a 1.6 GWh system in New South Wales and a 4 GWh system in California.
Cache Power’s project is different in three key ways:
- Scale and application: Designed from the start as a large, commercial CAES power plant in Alberta, with tens of gigawatt-hours of potential energy.
- Technology flavour: Advanced diabatic CAES rather than A-CAES, relying on improved compression/expansion efficiency rather than full thermal storage of heat.
- Hydrogen blending: Integrated plan for up to 75% hydrogen fuel blend, moving eventually to full hydrogen utilization.
If you’re evaluating long-duration energy storage options, this is the decision space: A-CAES, modern D-CAES, pumped hydro, flow batteries, and high-capacity lithium-ion are all in play. Alberta’s bet is that large-scale CAES plus hydrogen is a strong fit for its geology, grid, and industrial base.
Hydrogen, Carbon Capture, and the Path to Net-Zero
One of the most interesting aspects of the Cache Power project is how it intersects with hydrogen and carbon management.
The plant is designed so that its gas turbines can blend up to 75% hydrogen with natural gas, with a roadmap toward 100% hydrogen as supply chains and economics improve. That aligns directly with Canada’s net-zero electricity and hydrogen strategies.
Babcock & Wilcox, a major power equipment supplier, is collaborating on the hydrogen expansion using its BrightLoop technology. BrightLoop is designed to:
- Produce low-carbon hydrogen
- Isolate CO₂ for capture and storage, rather than venting it to the atmosphere
So you get a stack of green tech working together:
- Renewables generate surplus electricity
- Surplus power runs compressors to store energy as compressed air
- Hydrogen (increasingly low-carbon) fuels the heating and expansion stage
- CO₂ is captured rather than emitted
Is this perfectly clean on day one? No. It’s a transition pathway. But it’s a serious improvement over unabated gas plants and a pragmatic step toward a fully decarbonized, dispatchable resource.
For companies planning decarbonisation, this is the type of hybrid project to watch: storage, hydrogen, and carbon capture engineered into a single commercial asset, not separate pilots.
Why Alberta—and Local Communities—Stand to Benefit
Alberta’s grid is in the middle of a complex shift: coal is being retired, gas remains dominant, and wind and solar are growing quickly. That creates volatility—both technical and economic.
A large CAES facility helps in several ways:
- Grid stability: 640 MW of dispatchable capacity can respond to sudden shortfalls or price spikes.
- Renewable integration: 48 hours of storage makes it far easier to deal with multi-day wind lulls and solar variability.
- Market resilience: Storage can buy low, sell high, and reduce exposure to extreme price events.
There’s also a strong local and social dimension:
- The project is expected to deliver economic benefits to the region through construction jobs, ongoing operations, and local procurement.
- Cold Lake First Nations has been actively engaged and is anticipated to partner with Cache Power in both ownership and operations.
That partnership matters. Green technology isn’t just about carbon; it’s about who benefits from the build-out. Indigenous participation in clean infrastructure is one of the more positive trends in Canada’s energy transition, and projects like this reinforce it.
What This Means for Utilities, Developers, and Climate-Focused Businesses
Here’s the thing about Alberta’s CAES project: it’s not just an interesting news item. It’s a signal.
If you’re a utility, IPP, or large energy user, there are a few practical implications:
-
Start treating long-duration storage as a core asset class.
Multi-day storage isn’t theoretical anymore. When projects like Cache Power’s CAES and Hydrostor’s A-CAES move forward, they shape capacity markets, reliability planning, and renewable build-out assumptions. -
Plan portfolios, not single technologies.
Batteries, CAES, hydrogen, and demand response each do different jobs. You’ll get the best economics and reliability by combining them rather than betting on just one. -
Watch for co‑benefits and revenue stacking.
Long-duration storage can earn revenue from energy arbitrage, capacity, ancillary services, and possibly carbon-related incentives when tied to hydrogen and CO₂ capture. -
Engage early on community and Indigenous partnerships.
Alberta’s CAES project is a reminder: social licence and shared ownership models are increasingly standard for large green technology assets.
If your business touches green technology, AI for energy planning, or sustainable infrastructure finance, these projects are powerful data points. They show where regulators are comfortable, what types of hybrid systems get approved, and how developers structure real-world net-zero assets.
Where Green Technology Goes Next
As we move through winter 2025, grids across North America and Europe are under pressure: extreme weather, higher electrification loads, and accelerating coal retirements. Short-duration batteries alone won’t carry that load.
Projects like Cache Power’s CAES facility in Alberta and large A-CAES builds elsewhere are shaping a new layer of the system: flexible, long-duration, low-carbon storage that supports 24/7 clean power.
If you’re working on green technology strategy, this is a good moment to ask:
- Where would multi-day storage de-risk your portfolio or grid plan?
- How could hydrogen or carbon capture pair with storage in your region?
- Which partners—technical, financial, and community—do you need at the table early?
Compressed air energy storage isn’t futuristic. It’s being dug, drilled, engineered, and financed right now. The question is who will treat it as a central pillar of their net-zero strategy—and who will be playing catch-up once projects like Marguerite Lake are already online.