In this paper, a micro-hybrid energy storage system, for a small power grid, which combines the concepts of pump storage plant (PSP) and compressed air energy storage (CAES), is proposed. There are two tanks, one open to the air and one subjected to compressed air, as well as a micro-pump turbine (MPT) in the hybrid system. The basic principle is that the MPT utilizes excess power from the grid to pump the water, which in turn compresses the air, and in this way, the energy is changed into internal energy of air. The energy in the air will be released to drive water passing through the MPT to generate power when the supply of power from the grid is insufficient. To validate the above proposal, such a micro-system was designed considering geometrical and operational conditions. Due to the large head variation for MPT, a variable speed machine [1] was designed by means of an inverse design method. After geometrical modeling and mesh generation for the complete configuration of the MPT, which consists of spiral casing, tandem, runner and draft tube, CFD simulations of typical operating points during pump mode and turbine mode were implemented. Special treatments of boundary conditions induced by the air compression or decompression were applied in the simulation. This energy storage system shows promising potential for application as the results indicated that the performance of the system and MPT was comparable. (C) 2013 Elsevier Ltd. All rights reserved.