Sanmenxia’s Shanzhou CAES

Executive Overview

Sanmenxia's Shanzhou CAES is a 700 MW / 4,200 MWh advanced compressed air energy storage project in the Shanzhou district of Sanmenxia, western Henan Province, China, developed by Zhongchu Guoneng (Beijing) Technology Co. (ZCGN). The project was approved by local authorities on November 24, 2025, with construction expected to commence in 2026 and a designed operating life exceeding 25 years. The technology is developed by the Institute of Engineering Thermophysics (IET) of the Chinese Academy of Sciences — the same research institution behind ZCGN's earlier Feicheng (300 MW / 1,800 MWh, commissioned April 2024) and Zhangjiakou (100 MW) reference projects. ZCGN has raised approximately CNY 1.66 billion across four financing rounds, with strategic investors including China Development Bank Capital and China Three Gorges New Energy. At 700 MW / 4,200 MWh, the Sanmenxia project would surpass the Huai'an Salt Cavern facility (600 MW / 2,400 MWh, commissioned March 2026) as the world's largest CAES installation upon completion.

How It Works & Differentiation

The IET-developed advanced CAES system uses a high-capacity compression station, underground cavern storage, expansion turbine-generator sets, a high-efficiency thermal storage unit, and an intelligent control system. The Feicheng 300 MW predecessor achieved 72.1% system efficiency, annual generation of approximately 600 GWh, and reduced coal consumption by 190,000 tonnes per year — a unit cost reduction of more than 30% versus the earlier 100 MW Zhangjiakou project, demonstrating clear scale economies. The six-hour discharge duration at 700 MW output gives the Sanmenxia project a 4,200 MWh storage capacity, making it the most energy-dense single CAES facility planned anywhere in the world. Current CAES capital costs in China are approximately CNY 800–1,500 per kWh, with lifecycle electricity costs of CNY 0.20–0.30 per kWh.

Commercialization & Traction

Chinese authorities have designated CAES as a cornerstone technology in the 14th Five-Year Plan for large-scale, long-duration storage. The Sanmenxia project is ZCGN's fourth and largest deployment after the 10 MW Feicheng demonstration (2021), the 100 MW Zhangjiakou project, and the 300 MW / 1,800 MWh Feicheng national demonstration project. Each step has delivered measurable cost reductions and efficiency improvements. The Sanmenxia project is sized to support grid stability, renewable integration, and power security across Sanmenxia and neighbouring cities in Henan — a province with significant coal-fired generation being displaced by wind and solar buildout.

Scalability & Strategic Context

The Sanmenxia project sits at the frontier of China's rapidly scaling CAES pipeline, which now totals over 4.2 GWh of operational or under-construction capacity as of March 2026. The progression from 300 MW (Yingcheng, January 2025) to 600 MW (Huai'an, March 2026) to 700 MW (Sanmenxia, in development) in under 18 months confirms that Chinese developers are executing a deliberate capacity scaling roadmap. CAES's competitive advantage over lithium-ion BESS in this segment — lower per-kWh cost at multi-hour durations, 25-plus year asset life, and no critical mineral inputs — makes it the preferred technology for China's grid-scale long-duration storage buildout alongside pumped hydro.