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Compressed Air Energy Storage (CAES) technology has become an acceptable solution in managing peak load power demand with the ever-increasing emphasis on combining renewable baseload electricity generation. In these power plants, the unused energy during off-peak periods is stored in huge underground salt caverns to be consumed later for electricity generation following a reheat in a gas turbine during the peak hours, thereby allowing 2/3 of the turbine energy which is utilized for compressing air to be available for electricity generation during the peak hours. In this article, CAES plants and operational researches obtained during the last three decades of experiments with two plants of 290 MW at Hantrof, Germany and 110 MW at Alabama, USA have been explained, also, latest generations of these CAES plants and their developments in conjunction with the potentials of Iran in utilizing her salt domes for optimum power production are discussed.