Compressed Air Energy Storage (CAES) is a combination of energy storage and generation by storing compressed air using off-peak power for generation at times of peak demand. In general, both charging and discharging of high-pressure vessel are unsteady processes, where the pressure is varying. These varying conditions result in low efficiencies of compression and expansion. In this paper, a new constant-pressure CAES system to overcome the current problem is proposed. An energy analysis of the system based on the concept of exergy was performed to evaluate the energy density and efficiency of the system in comparison with the conventional CAES system. The new constant-pressure CAES system combined with pumped hydro storage requires the smaller cavern with only half of the storage volume for variable-pressure CAES and has a higher efficiency of system.