The archive · Product Ideas · Product decision · 2019–2022
Hydrostor wins a record $250M Goldman Sachs bet on water-sealed air storage
Hydrostor mines water-sealed caverns so old compressed-air storage works anywhere, proving it in Ontario before Goldman Sachs invested $250M.
Hydrostor
What it had to solve
Compressed-air energy storage has existed for decades but never took off because classic designs depend on natural salt caverns or other rare geology, while pumped hydro, the leading grid-scale option, needs hills and abundant water. As wind and solar grew, grids began needing cheap multi-hour storage, and Canadian startup Hydrostor set out to make the old technology work in far more places.
How it works
Compressed-air energy storage is a century-old idea that never took off for the electricity grid, and the reason is mostly geography: classic designs need natural salt caverns or other forgiving geology, while pumped hydro, the dominant form of grid storage, needs hills and huge water supplies. Canadian startup Hydrostor set out to remove that constraint with an engineering tweak — mining its own underground cavern and using water pressure to make storage work in any reasonably competent bedrock.
The system works like this: Hydrostor sinks an 8-foot-diameter shaft roughly 2,000 feet deep, hollows out a cavity and floods it. To charge, an aboveground plant compresses air and pushes it below the water barrier; to discharge, the compressed air is released to spin a turbine. Because the water column keeps pressure constant as the air volume changes, the cavern can be cut into ordinary bedrock instead of found in a salt dome, and a plant needs only a small footprint and negligible water.
Hydrostor proved the idea at small commercial scale first: a 2 MW/10 MWh facility in Goderich, Ontario entered the province's wholesale power market in 2019 and generates about $1 million in annual revenue — an achievement that still eludes many better-funded long-duration storage startups. The company says it spent only about $5 million on development elsewhere, and that work produced three late-stage projects that would need $2.5 billion in construction capital and generate at least $5 billion in contracted revenue.
On 10 January 2022 Goldman Sachs' private equity division invested $250 million in Hydrostor — growth capital, as CEO Curtis VanWalleghem put it, not "prove the technology" venture money. The raise surpassed the $240 million Form Energy collected for its iron-air battery, making it one of the largest corporate investments ever made in a long-duration storage company, and the announcement drew a 313-comment debate on Hacker News over efficiency versus falling lithium-ion prices.
Why it lands
- Fixing the site constraint attacks the real reason compressed-air storage never scaled: rare geology, not the physics.
- The water column keeps cavern pressure constant as air drains, avoiding the pressure tail-off that plagued simpler compressed-air designs.
- A small revenue-generating plant in Ontario came before the giant capital ask, giving Goldman a proven commercial project to underwrite.
- The 8-hour, hundreds-of-megawatt profile positions the technology against pumped hydro rather than against short-duration lithium batteries.
What it did
The Ontario plant generates around $1 million a year, a rare revenue-making megawatt-scale storage project, and the late-stage pipeline promised $2.5 billion in construction and at least $5 billion in contracted revenue. On 10 January 2022 Goldman Sachs' private equity arm invested $250 million, one of the largest corporate investments ever in long-duration storage, exceeding the $240 million raised by rival Form Energy.
What you can take
If a technology failed because it demanded a rare site, change the site requirement instead; then de-risk a capital-intensive bet with a small plant that already earns revenue.
Since then
With the $250 million, Hydrostor planned to roughly double its staff of about 25 and expand development into Europe and the rest of the US. The money would also carry its three late-stage projects — two in California environmental review, one in Australia — toward construction over about four years. Hydrostor began offering 24/7 clean energy to corporate buyers by pairing wind and solar contracts with a facility, and VanWalleghem framed the investment as proof the technology had moved past the venture stage, calling it a "mousetrap" he believes is better than anyone else's.
Sources
- Goldman Sachs just made a record-setting investment in long-duration energy storage
- Goldman Sachs invests $250M in compressed air energy storage (Hacker News discussion)
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