Highlights

• China has commissioned the world's largest compressed air energy storage (CAES) facility in Jiangsu Province.
• The facility boasts a 600 MW capacity and 2.4 GWh storage.
• It uses underground salt caverns instead of lithium batteries for grid-scale energy storage.
• The operational CAES plant shows that large-scale energy storage can be achieved without battery-critical minerals like lithium, cobalt, or nickel.
• This reduces supply chain pressure and geopolitical risks.
• The technology can replace natural gas peaker plants for grid balancing and renewable integration.
• It offers a modular energy transition pathway that scales using geology and steel, rather than constrained mineral chemistries.

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China has brought into commercial operation what is purported to be the world’s largest compressed-air energy storage (CAES) facility in Jiangsu Province, marking a significant milestone for long-duration, grid-scale energy storage that does not rely on lithium, cobalt, or battery chemistries. The project—officially known as the Guoxin Suyan Huai’an Salt Cavern Compressed Air Energy Storage Project—has a 600 MW power rating and 2.4 GWh of storage capacity, making it the largest operational CAES installation globally.

Independent reporting, such as from the Energy Institute, (opens in a new tab) confirms the plant is fully grid-connected and operational, not a pilot or demonstration. The system consists of two 300 MW units that use underground salt caverns to store compressed air during periods of low electricity demand and release it to generate power during peak demand. Estimated annual output is approximately 790 GWh, contributing to peak shaving, frequency regulation, and renewable integration across the regional grid.

 Underground Storage, Industrial-Scale Impact

Unlike lithium-ion or flow batteries, the Jiangsu CAES plant relies on mechanical and thermal energy storage, not electrochemical reactions. Public sources describe the system as advanced/adiabatic CAES, meaning compression heat is captured and reused during expansion to improve efficiency and avoid fossil-fuel combustion. While technical details vary by source, there is no evidence of lithium, cobalt, nickel, or rare-earth-dependent battery components in the core storage system.

This matters. The project demonstrates that large-scale storage capacity can be added without increasing demand for battery-critical minerals, many of which face supply concentration, geopolitical risk, and long permitting timelines.

Why This Matters for Rare Earths and Critical Minerals

This deployment does not replace batteries—but it changes the demand equation should this ever scale out. Grid operators possibly have a proven option for long-duration storage that:

• Reduces pressure on lithium, cobalt, and nickel supply chains
• Complements rare-earth-intensive technologies (such as wind turbines and EVs) rather than competing for minerals
• Scales using geology and steel, not constrained mineral chemistries

For investors and policymakers tracking critical minerals, the signal certainly seems relevant: storage diversification is real, operational, and possibly scaling. Rare earths remain essential for generation, motors, and magnets—but not every part of the energy transition must flow through battery minerals.

Elaboration on the Implication

In practical terms, this kind of compressed-air energy storage can replace or sharply reduce the need for natural-gas “peaker plants”—the fossil-fuel power stations that only turn on during times of high electricity demand, such as heat waves, cold snaps, or evening hours when solar power fades. Instead of burning gas, the grid can release stored compressed air to deliver electricity for several hours at a time, stabilizing supply when wind or solar output drops suddenly. At scale, systems like this are best suited for industrial regions, coastal grids, and renewable-heavy power systems that need multi-hour backup power, grid balancing, and emergency reserve capacity.

The technology is not experimental—it is already operating at utility scale—but widespread global deployment will likely take 5 to 15 years, limited mainly by geography (salt caverns or similar formations), upfront capital costs, and grid planning cycles. Where geology is favorable, compressed-air storage could become a mainstream alternative to gas peakers and large battery farms by the mid-2030s, especially in countries prioritizing energy security and mineral independence.

The REEx Read

This project confirms a quiet but important truth: the energy transition is becoming more modular. China is adding storage capacity without deepening dependence on battery supply chains—and the rest of the world should pay attention.