The demand for electrical energy varies substantially over a 24 hour period. The supply of energy must be exactly matched to these changing demands.. Taking generating facilities on and off line and operating them at less than optimum performance levels is uneconomical. Therefore, when it is feasible, pumped storage is used to achieve load leveling. Water is pumped uphill and stored in a reservoir during low demand periods and allowed to flow down through turbogenerators when demand is high. In Southern California there are no locations where demand, water supply and environmentally acceptable reservoir sites coexist. Compressed Air Energy Storage (CAES) is a potential candidate for electrical energy load leveling in the absence of conventional pumped storage capability. In CAES, air is mechanically pressurized using surplus electrical power into man-made subterranean caverns. It is released during peak demand periods and either powers a turbine directly. or is mixed with natural gas and the mixture burned in the turbine. None of the suitable sites identified for CAES exist in coastal areas within the United States: Offshore Compressed Air Energy Storage (OCAES) is a conceptual modification of CAES in which the very high ambient pressures at depth in the ocean serves to reduce the storage vessel structural requirements.. Air is pumped into the system, displacing the seawater, until the storage section is filled. This air is maintained at the water pressure appropriate to the depth. Air can be withdrawn from the storage vessel at a constant pressure until water starts to fill the outfall. There are several sites along the California coast that offer close proximity to deep water and existing access to grid transmission lines, transformers, switching and other infrastructure. The paper discusses a 230 MW OCAES system sited at Carlsbad as an example.