Peter pointed out that as well as supplementing a conventional power station, energy storage can be used to allow a renewable intermittent energy source (such as wind and solar) to be used as a base-load supply.
General Compression uses a electric motor/generator connected to water cooled two stage pistons to compress the air. Interestingly the system uses a hydraulic motor/pump between the electric and air systems. Their pilot system is 2MW, but the system can be expanded.
Peter commented that the engineer technology used is based on that of automotive engines (whereas to me it is reminiscent of steam engines). Perhaps the Australian Government would be interested in a grant to investigate having former automotive workers manufacture this equipment in Australia using surplus capacity at car plants. This would provide Australian jobs as well as lowering Australia's carbon emissions.
Bulk energy storage projects offer unique benefits over smaller distributed storage technologies. Primarily driven by the significantly lower relative costs achieved though economies of scale and the ability to store energy for tens of hours, bulk energy storage projects allow for energy storage to be deployed at the megawatt scale on transmission and distribution networks. Core bulk storage applications include firm renewable energy projects, network level integration of distributed PV generation, and no or low-carbon supply of ancillary services.
Compressed air energy storage (CAES) is one of two primary types of bulk energy storage , the other being pumped hydro, and store energy as compressed air in under or above ground vessels. General Compression is a Boston, USA based technology development company that has developed a near-isothermal compressed air energy storage system. Traditionally CAES projects have used natural gas to add heat to the generation portion of the process, General Compression's technology captures heat generated as electricity is converted to compressed air and reintroduces that heat during the generation process eliminating the need to burn natural gas making the technology fuel & emissions free.
More information, please see http://cecs.anu.edu.au/seminars/more/SID/3429