Romania is developing a compressed-air energy storage (CAES) concept designed for long-duration flexibility in south-east Europe. The proposal is being developed by Hagag Europe and Airengy. It focuses on storing energy for longer periods than lithium-ion systems commonly used in the region for intraday price movements. In a power system affected by renewable volatility and expanding balancing needs, storage duration is positioned as a key attribute alongside storage capacity.
Salt-cavern storage concept and operating cycle
The CAES plan would use Romania’s underground salt-cavern formations as natural storage reservoirs. Electricity generated during low-price periods would be used to compress air and store it underground under high pressure. When electricity prices rise or system demand increases, the stored compressed air would be released to drive electricity generation. The approach targets shifting energy from low-price periods to higher-demand or higher-price conditions.
The first development phase is expected to deliver approximately 200 MWh of storage capacity with an estimated investment of €4.5 million. A second phase would target around 25 MW of discharge capacity and approximately 5 GWh of total storage. The investment for the second phase is estimated at roughly €55 million. The project’s staged structure links early capacity deployment with a later expansion of discharge and total stored energy.
Role in power markets versus lithium-ion batteries
The project is described as a flexibility technology that complements batteries rather than replacing them. Lithium-ion batteries are highlighted for applications including frequency regulation, fast-response balancing services and daily energy arbitrage. Compressed-air storage is aimed at a different value segment tied to longer time horizons. Long-duration operation can capture value from multi-day price spreads, prolonged renewable shortfalls, extended system stress and capacity-related products.
This distinction is tied to how revenue opportunities may develop as renewable penetration increases across the region. The CAES model is associated with a revenue profile different from short-duration battery services. As a result, the technology’s market participation depends on how long-duration products are structured and compensated. The proposal therefore aligns its operational characteristics with longer-duration market needs.
Flexibility requirements amid expanding solar and wind
Romania’s need for additional flexibility is described as increasing with each new renewable project entering the market. Solar and wind deployment are expanding rapidly, while grid upgrades and storage investments have not always kept pace. The changes are linked to higher price volatility, transmission bottlenecks and periods when renewable generation exceeds immediate demand. These conditions create requirements for shifting energy across longer intervals.
The CAES concept is presented as one way to bridge imbalances by moving energy across multiple days rather than only a few hours. It is described as potentially valuable during extended low-wind conditions, cloudy periods and episodes of surplus renewable production. The focus on multi-day shifting aligns with situations where generation shortfalls persist beyond typical intraday windows. This positioning connects the project’s duration to specific operational challenges in renewable-heavy systems.
Project partners, resources and financing considerations
The proposal relies on an industrial and geological basis in Romania, including suitable salt-cavern resources. It also references one of the largest renewable development pipelines in the region and an electricity market large enough to support new storage business models. Under the proposed structure, Hagag Europe would provide access to cavern infrastructure. Airengy would supply storage technology, engineering expertise and an operational framework for commercialisation.
The main challenge highlighted is bankability alongside market design. Long-duration storage projects require stable and predictable revenue streams through mechanisms such as energy arbitrage, balancing services, capacity remuneration or contracted flexibility products. Without regulatory frameworks that reward storage duration appropriately, financing may be difficult even where system benefits are present. The initiative is therefore framed around how south-east Europe values flexibility within its market rules.