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Wind power has made incredible inroads into the U.S. energy system thanks to big, efficient machines standing hundreds of feet tall. But the future of wind power may be underground.

In the abandoned mines and sandstones of the Midwest, compressed-air storage ventures are trying to convert the intermittent motions of the air into the kind of steady power that could displace coal.

Compressed-air energy storage plants use compressors to store electricity generated when it’s not needed. The air, pumped into large underground formations, is like a spring that’s been squeezed and when it’s needed, it can deliver a large percentage of the energy that it received.

The first and only such plant in the United States went online in 1991, and though the technology didn’t take off, it did prove that it worked. And now, combining cheap wind energy and compressed-air storage could create a potent new force in the electricity markets.

“This is the first nonhydro renewables technology that can replace coal in the dispatch order,” said David Marcus, co-founder of General Compression, a new company that received $16 million in funding from investors including the utility Duke Energy to build a full-scale prototype of their energy storage system, which would be deployed with arrays of wind turbines.

The dispatch order is how grid operators decide which power plants to switch on. They have to balance the amount of generation and consumption or they risk the grid’s stability. The amount of power people use goes up and down, but it stays above a certain level all the time. To meet that need, utilities buy consistent always-on power from the large, cheap coal and nuclear power plants that are the backbone of the electric grid.

The electricity they need to meet the peaks in energy demand is generated by what are known as peaking plants, usually powered by natural gas. When the wind is blowing, it is usually the cheapest peaking power available, so it keeps the natural gas plants shut off. If they want to replace coal plants in the pecking order, though, they’ll have to work all the time.

And to do that, they’ll need a way to unlink themselves from the on-again, off-again nature of the wind.

“It’s a fractal problem,” said Marcus. “You have intermittency problems on every time scale.”

That problem has brought compressed-air energy storage roaring back. Marcus’ company has a long way to go before they can turn their prototype system into the kind of technology that can be deployed at the nation’s vast wind farms. But compressed air storage of one type or another is on the verge of becoming a mainstream power technology.

The nation’s largest energy storage option right now is pumped hydroelectricity. When excess electricity is present in a system, it can be used to pump water up to a reservoir. Then, when that power is needed, the water is sent through a turbine to generate electricity. The U.S. electric system has 2.5 gigawatts of pumped hydro storage capacity, but most of the good, cheap sites are already occupied, and creating new reservoirs is not environmentally benign.

While wind farmers say storage isn’t technically necessary until the amount of wind power on the grid exceeds 20 or 30 percent of the electrical load, private analysts, the Electric Power Research Institute, and the Department of Energy have identified grid-scale storage as a key need for the rapidly diversifying electricity system.

And going forward, compressed-air energy storage looks like the cheapest option available. Independent analysts have come to similar conclusions.

“CAES is the least cost, utility-scale, bulk-storage system available. If other factors such as its low environmental impact and high reliability are considered, CAES has an overwhelming advantage,” one Department of Homeland Security physicist concluded in a 2007 paper in the journal Energy.

In the last four months, four projects have gotten new funding. In December, the rights to a long-awaited project in Norton, Ohio, were purchased by First Energy, a large utility in the area. The Norton project could store 2.7 gigawatts of power in an abandoned limestone mine.

In California, PG&E received a $24.9 million grant from the Energy Department to build a 300-megawatt plant in Kern County. New York State Electric and Gas received $29 million for a similar facility in the town of Reading, New York, using an existing salt cavern there. The Iowa Stored Energy Project received a $3.2 million forgivable loan from the state and will finish drilling its first research well in the next month. The plan is to attempt to store energy in porous sandstone, just like the 1.7 trillion cubic feet of natural gas that lie beneath the surface of the United States.

The man behind the technology slated to be used in the two Energy Department-backed projects is engineer Michael Nakhamkin, founder of Energy Storage Power Corporation. He designed the only U.S. compressed air storage plant, in McIntosh, Alabama.

That plant was built in the late 1980s by a very small southern utility, the Alabama Electric Cooperative. They had a unique problem, Nakhamkin said, in that their daytime load far exceeded their nighttime load, the opposite of the regular pattern.

The big coal plant they needed to meet the daytime demand made too much power at night. Turning down the plant at night wasn’t a good solution because coal plants work most efficiently at full capacity, and turning them down makes them dirtier. And even with the plant at full power during the day, the utility still had to buy power from other companies to meet their peak daytime demand.

But with a storage plant, they could use the extra electricity made at night to satisfy their daytime peak demand.

Based on the first commercial plant (.pdf) ever built in Huntorf, Germany, the Electric Power Research Institute and Nakhamkin’s engineering firm came up with a plan to store compressed air in a salt dome in Alabama. They created a geological pocket 900 feet long and up to 238 feet wide in the dome by pumping water into it to dissolve the rock salt. When the (briny) water was pumped back out, the salt resealed itself and they had an air-tight container: “The solution-mined cavern is a large subterranean pressure vessel,” as an EPRI report explained.

During off-peak times, electricity runs a compressor which pumps the air down into the cavern. Then, when energy is needed, the air is released from the reserve to power a fairly standard turbine, with a little help from natural gas. The system has worked for more than 25 years.

In 1991, when the plant went online, there were high hopes that the technology might catch on among utilities.

‘We expect the CAES plant technology pioneered in Alabama to lead to widespread application in this country,” said Robert Schainker, the manager of the Electric Power Research Institute’s Energy Storage Program in a press release announcing the plant’s completion. ‘Three fourths of the United States has geology suitable for underground air storage. At present, more than a dozen utilities are evaluating sites for CAES application.”

But with low fossil fuel prices and little intermittent renewable energy on the grid, there wasn’t much incentive for utilities to build the plants. The plant saved money for the Alabama Electric Cooperative, but it wasn’t “critical savings” as Nakhamkin put it.

“Rich people don’t talk about how to save five or 10 dollars,” he said.

Planning for the Iowa Stored Energy Project began in 2001, but at the time, it just didn’t make economic sense for the small municipal utilities involved.

“Without a lot of renewables, the business model for CAES is not that strong,” Holst said. With wind sometimes producing as much as 15 percent of Iowa’s electricity, the case for the business gets stronger every day.

Nakhamkin thinks the time has come for compressed air to take off, particularly with the new plant designs that incorporate the data from the McIntosh plant.

“We analyzed several years of plant operation and from this, we generated a second generation of CAES technology,” he said. “It’s much more reliable and much more adjustable for the smart grid, for solar energy and a variety of wind power plants.”