This article was published by The Energy Mix on Jan. 28, 2026.
Toronto-based energy storage developer Hydrostor has secured permission to build a 500-megawatt compressed-air energy storage system in the Mojave Desert and is now seeking customers to contract the project’s full capacity.
Final permitting approval from the California Energy Commission (CEC) positions its Willow Rock project to be “shovel-ready in 2026,” Hydrostor said in a mid-December release.
The grid-connected advanced compressed air energy storage (A-CAES) is designed to store and deliver enough electricity to power more than 400,000 average California homes for more than eight hours.
Willow Rock is also projected to deliver US$500 million in direct and indirect economic benefits regionally, “supporting thousands of jobs over the course of construction, with 700 workers onsite at peak construction,” Emily Smith, Hydrostor’s director of external affairs, told The Energy Mix. Once it goes into operation, the facility is expected to support 25 to 40 full-time jobs.
Unlike lithium-ion battery storage systems, Willow Rock will require neither critical minerals nor hazardous materials, Hydrostor says. The storage process begins at the point of its grid connection, where excess renewable energy, like that generated at mid-day by solar plants, spins compressors that produce heated compressed air.
The heat is captured and stored in tanks, while the cool compressed air is pushed 600 metres below ground into a water-filled cavern. As the air enters the cavern, the water is pushed up into a surface reservoir. The A-CAES system becomes a fully-charged battery when the cavern is full of air.
When power is needed, like during periods of peak power demand or when solar or wind production drops, the process reverses, using gravity to draw the stored water back down into the cavern, displacing the air and forcing it back up to the surface. The air is reheated using the heat stored in the tanks, then used to spin turbines to generate electricity.
Hydrostor has secured a retail supply agreement with the local water agency for a one-time water draw of 800 acre-feet, or around 987,000 cubic metres, Smith told The Mix. It’s a considerable volume of water—more than twice what’s used annually by a U.S. National Security Agency data centre in Utah, for example. But the draw will occur only once.
Willow Rock is in fact expected to be a net water producer, with the water generated as a byproduct of the compression process collected for reuse in the reservoir, Smith said.
The CEC approval comes almost three years after Hydrostor signed a 25-year contract with Monterey’s Central Coast Community Energy to reserve 200 megawatts of Willow Rock’s capacity for the non-profit utility.
With an additional 50 to 100 megawatts being negotiated, that “leaves 200 to 250 megawatts up for grabs,” reports Canary Media. The uncontracted capacity remains an obstacle to securing the US$1.5 billion in financing needed to begin construction, but Hydrostor has declared itself encouraged by the California Public Utilities Commission’s September recommendation that the state secure 10 gigawatts of long-duration storage by 2031.
“They’ve identified the need for very near-term procurement, so we’re looking forward to participating in that,” company president Jon Norman told Canary Media.
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