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Energy storage systems are becoming more important for load leveling, especially for widespread use of intermittent renewable energy. Compressed air energy storage (CAES) is a promising method for energy storage, but large scale CAES is dependent on suitable underground geology. Micro-CAES with man-made air vessels is a more adaptable solution for distributed future power networks. In this paper, energy and exergy analyses of a micro-CAES system are performed, and, to improve the efficiency of the system, some innovative ideas are introduced. The results show that a micro-CAES system could be a very effective system for distributed power networks as a combination that provides energy storage, generation with various heat sources, and an air-cycle heating and cooling system, with a energy density feasible for distributed energy storage and a good efficiency due to the multipurpose system. Especially, quasi-isothermal compression and expansion concepts result in the best exergy efficiencies