The low efficiency of existing CAES systems is due to large energy losses during the air compression process. This could be remedied by building an adiabatic CAES system, where the heat of compression is stored and subsequently used during the expansion process in the turbine. An energy and exergy analysis of A-CAES is presented in this article. A dynamic mathematical model of an adiabatic CAES system was constructed using Aspen Hysys software. The volume of the CAES cavern is 310000 m(3) and the operation pressure inside the cavern ranges from 43 to 70 bar. Thermal oil was used as the working medium in thermal energy storage system. The temperature in the, hot oil tank was 300 degrees C and in the cold oil tank 80 degrees C. Simulations of processes of loading and unloading of compressed air storage were performed and then places where exergy destruction occurs were identified. The biggest exergy destruction occurs in the compressors (276.191 MWh/cycle in total) and turbines (190.394 MWh/cycle in total). Major destruction of exergy was also reported at control valve V2 (103.688 MWh/cycle). Round trip efficiency of the system is 50%. (C) 2017 Elsevier Ltd. All rights reserved.