A Battery Made of Air? Hydropneumatic Energy Storage Takes Flight

Since the advent of modern renewables, producers have faced the question of how energy produced when the sun shines can be used when it doesn’t. Now, technical innovations are giving new life to an older storage technology that uses compressed air.

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Skyrocketing energy demand sparked in large part by the construction of new data centers, along with massive solar and wind installations to power them, have created a booming market for energy storage. More than 112 gigawatts of energy storage were created in 2025, a rise of 48% compared to the year prior. Lithium-ion batteries make up 90% of energy storage today, with China almost totally dominating production. 

Now, an older method to store energy using compressed air is drawing new interest, thanks to digital innovations that can make it more efficient.

João Mendes – a physicist at TecLabs, the incubator for new technologies at the Faculty of Sciences of the University of Lisbon, Portugal – told Earth.Org how the “hydropneumatic” storage method works. “You use electricity to collect the air from the environment and put it inside a reservoir. When you’re doing this, the compressed air has the potential to produce power. This means that if you want to open the reservoir and have the air go through a turbine, it will produce power,” he explained.

Because air, even when compressed, takes up large amounts of space, natural caverns are most commonly used for storage. But while the technology “provides energy market support and socio-economic benefits,” underground geology is often perceived as a risk by utilities. Additionally, because traditional compressed air systems suffer from low round-trip efficiency due to heat loss during compression, the technology has historically been limited to massive, specialized industrial facilities – most notably the Huntorf plant in Elsfleth, Germany, the first commercial-scale diabatic Compressed Air Energy Storage plant in the world. 

There, since 1978, energy from the grid produced during low demand times has been used to compress air and store it in underground salt caverns. It is then released during peak load periods to supplement the electricity production of the natural gas power plant.

KeepIt, an energy storage company co-founded by Mendes, uses a modified system that improves this efficiency with a new type of hydraulic accumulator and digital system monitoring. The concepts underlying the innovation were published in 2023, and the first prototype already serves the energy storage needs of the university campus.

“It’s mostly an engineering innovation,” Mendes told Earth.Org. “The different aspects of the system existed, so the innovation was how we put it together, and the control of the system. We needed to be able to work with [compressed air] in a way that we could optimize it, and the optimization is our innovation. How do we ensure we are efficient, using which parameters? How can we improve the energy density?”

The next step was to further develop the system’s modular offering: instead of storing the compressed air in an underground cave system, it is kept in a container. “Instead of needing to develop an additional storage project for every megawatt of power,” Mendes said. “We would have cubes for storage and cubes for power. The module is really, really small. Imagine a battery. We can just stack other batteries and they would connect to each other like Legos. Each one is a small portion of a bigger system. It’s like a dam in a bottle.”

KeepIt is currently testing the system on a closed commercial scale, with plans to bring the solution to the market as early as 2027.