Feicheng advanced CAES national demonstration project

Executive Overview

The Feicheng Advanced Compressed Air Energy Storage (CAES) National Demonstration Project is a 300 MW / 1,800 MWh grid-scale energy storage facility located in Feicheng, Shandong Province, China, developed by Zhongchu Guoneng Technology Co., Ltd. (ZCGN). The plant achieved its first grid connection and power generation on 30 April 2024, marking it as the world's first and largest advanced CAES project at this scale. Total investment was 1.496 billion yuan (approximately $207.8 million), with the unit cost of the 300 MW system reported as more than 30% lower than the previous 100 MW CAES generation. The facility carries 100% independent intellectual property rights across all core technologies.

How It Works & Differentiation

The facility uses off-peak electricity to compress air and store it in an underground salt cavern at depths of up to 1,000 metres, with a gas storage capacity exceeding 500,000 cubic metres. During peak demand, the compressed air is released through multi-stage high-load turbine expanders to generate electricity, with high-efficiency supercritical heat exchangers recovering and reusing thermal energy from the compression process to improve round-trip efficiency. The rated design efficiency is 72.1%, with a continuous discharge duration of six hours and projected annual generation of approximately 600 million kWh. The use of salt cavern geology for storage, multi-stage wide-load compression, and supercritical heat exchange differentiate this system from earlier adiabatic CAES designs and from surface-based mechanical storage technologies.

Commercialization & Traction

The project has completed construction and entered commercial operation, providing peak shaving, frequency regulation, phase adjustment, standby power, and black start services to the Shandong grid. At full output, the facility can supply power to between 200,000 and 300,000 local households during peak demand periods. Annual coal savings are estimated at approximately 189,000 tonnes, with CO₂ emissions reductions of approximately 490,000 tonnes per year. The project's internal rate of return is reported at approximately 16.38%, with a payback period of around 7.1 years, and it is expected to participate in China's electricity trading market.

Scalability & Strategic Context

The Feicheng project is designated a national demonstration facility, with its technical outcomes intended to inform CAES deployment across China's broader energy storage programme. The 30% unit cost reduction compared to the previous 100 MW CAES system demonstrates the learning curve effects achievable through scale, supporting the economic case for subsequent projects. The technology's reliance on underground salt cavern geology constrains replication to regions with suitable subsurface conditions, but China has extensive salt formations in Shandong and other provinces. ZCGN's full ownership of the core intellectual property also positions the technology for potential export or licencing to other markets pursuing long-duration storage solutions.