The Australian electricity sector is undergoing a transformation in which variable renewable energy (VRE) is becoming a dominant generator. VRE sources such as wind and solar have intermittent generation profiles influenced by weather and climate with daily and seasonal variations. To support high penetration rates of VRE, energy storage is required to store energy during times of oversupply and discharge energy during times of under supply. Compressed Air Energy Storage (CAES) is a promising, economic technology to compliment battery and Pumped Hydro by providing storage over a medium duration (4–12 h). CSIRO and MAN-ES conducted a feasibility study on Adiabatic-CAES (A-CAES) based on the premise of storing compressed air in a permeable subsurface reservoir (i.e. depleted gas reservoir). The design assumptions regarding the storage reservoir are based on previous work conducted on behalf of Pacific Gas and Electric (PG&E) which consisted of drilling test wells and conducting air injection and withdrawal tests to determine suitability for a 300 MW-10 h facility. The plant design and equipment are based on commercially available components. This work found that A-CAES has the potential to achieve >60% round trip efficiency and provide levelised cost of storage (LCOS) as low as ~A$108/MWh.