Romania’s proposed compressed-air energy storage (CAES) project, developed by Hagag Europe and Airengy, introduces a potentially transformative model for long-duration energy storage in south-east Europe. While most storage investments in the region have focused on lithium-ion batteries designed to capture short-term intraday price movements, compressed-air storage targets a different segment of the market. In a power system increasingly shaped by renewable volatility, weather-dependent generation and growing balancing requirements, storage duration is becoming just as important as storage capacity.
The project intends to utilise Romania’s extensive 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 compressed air would be released to drive electricity generation. The first development phase is expected to provide approximately 200 MWh of storage capacity with an estimated investment of €4.5 million, while the second phase targets around 25 MW of discharge capacity and approximately 5 GWh of total storage, requiring investment estimated at roughly €55 million.
From a market perspective, compressed-air storage should not be viewed as a replacement for batteries but rather as a complementary flexibility technology. Lithium-ion batteries excel in applications such as frequency regulation, fast-response balancing services and daily energy arbitrage. Long-duration storage, by contrast, can capture value from multi-day price spreads, prolonged renewable shortfalls, extended periods of system stress and emerging capacity-related products. This creates a distinct revenue profile that may become increasingly valuable as renewable penetration grows across the region.
Romania’s need for additional flexibility is becoming more apparent with each new renewable project entering the market. Solar and wind deployment is expanding rapidly, while grid upgrades and storage investments have not always kept pace. The result is increasing price volatility, transmission bottlenecks and periods where renewable generation exceeds immediate demand. Long-duration compressed-air storage could help bridge these imbalances by shifting energy across multiple days rather than only a few hours, making it particularly valuable during extended low-wind conditions, cloudy periods or episodes of surplus renewable production.
The project also benefits from a strong industrial and geological foundation. Romania possesses suitable salt-cavern resources, one of the largest renewable development pipelines in the region and an electricity market large enough to support innovative storage business models. Under the proposed structure, Hagag Europe contributes access to the cavern infrastructure, while Airengy provides the storage technology, engineering expertise and operational framework necessary to commercialise the asset.
The principal challenge remains bankability and market design. Long-duration storage projects require stable and predictable revenue streams, whether through energy arbitrage, balancing services, capacity remuneration mechanisms or contracted flexibility products. Without regulatory frameworks that adequately reward storage duration, projects may struggle to attract financing despite their clear system benefits. Romania’s compressed-air initiative is therefore significant not only as a single infrastructure investment but also as a test of how south-east Europe values flexibility. The region’s energy transition will require more than batteries alone. It will require a diversified storage ecosystem where speed, scale and duration are all recognised and rewarded within the market.