A utility majority owned by Japan’s Mitsubishi has entered a pact to build a 220MW compressed air energy storage project in Germany.

Eneco, which the Japanese industrial giant snapped up in 2020 along with compatriot Chubu Electric Power, has signed a provisional agreement to jointly develop the project with long duration energy storage specialist Corre Energy.

The two Dutch companies have entered exclusive talks and expect to ink a final agreement in the coming months.

The deal also means Eneco, which owns onshore wind turbines in Germany, will secure the entire storage capacity under a long-term offtake agreement for the project.

As well as the 220MW energy storage facility the site will boast a 320MW turbine to convert the compressed air into electricity.

“This landmark agreement combines offtake, development and investment arrangements to propel our first German project while showcasing the demand for and deliverability of our [compressed air energy storage] solution to industry, authorities and investors alike”, said Keith McGrane, CEO of Corre Energy.

The facility will be based around Ahaus, a town in the state of North Rhine-Westphalia near Germany’s border with the Netherlands.

Corre Energy said the site is “well located between increasing offshore wind power production in the north and the significant power consumption regions to the south.”

It is close to the “future national hydrogen backbone grid,” said Corre Energy, “and will complement the regional establishment of an industrial scale renewables-based green hydrogen value chain.”

Hydrogen can be used to both compress the air at the CAES facility and provide power needed when the air is being converted back into electricity.

Corre Energy develops compressed air energy storage facilities in salt caverns. It has agreed to purchase four caverns for this project from Solvay, a multinational chemical company.

Solvay is still extracting salt from the caverns and the first one is due to be handed over to Corre Energy in 2027.

Corre Energy expects to use equipment from Siemens Energy following the launch of a collaboration between the companies in November.

The deal is Eneco’s second with Corre Energy following a 15-year offtake agreement for a project in the Netherlands, announced in 2022.