New York State Electric and Gas has informed the U.S. Department of Energy that it will not move forward with the proposed compressed air energy storage (CAES) project in the Town of Reading.

Upon completion of comprehensive engineering and financial evaluations, NYSEG determined that a number of site-specific issues, including the cost of site development, and energy market conditions, including the effects of inexpensive natural gas-fired generation on market prices, make the project at the Town of Reading site uneconomical.

In 2011, NYSEG received a $1 million grant from NYSERDA for the project.

The CAES project involves pumping compressed air into a depleted underground salt cavern using low-cost, off-peak electricity to power the compressors.  The compressed air is then released which spins a turbine to generate electricity as needed, particularly during times of high customer demand.

NYSEG President Mark Lynch says he hopes that the technical work developed during the exploration process will be valuable to others who may want to evaluate CAES technologies.