There are indeed political and economic problems with pumped hydro. However, the storage capacity of a CAES plant is limited only by the size of the underground reservoir, which can be enormous and divided among several storage volumes. Since the reservoir is underground, siting problems are minimised (unlike pumped hydro). With a CAES plant, storage can be in a solution mined salt cavern, depleted natural gas field, porous sandstone formation or hardrock cavern. The first three are inexpensive, while the latter is about a factor of ten more costly per unit of storage. Vast amounts of natural gas and petroleum liquids are routinely stored underground in the US and elsewhere to meet peak demand.
Furthermore it can be easily shown that the additional cost of a storage system adds only 10-20% to the unit cost of energy above that from wind without storage. Thus it is economically and technically feasible to provide seasonal storage of wind electricity with a utility scale CAES and wind plant combination.
I congratulate Windpower Monthly for publishing the Otway letter. It is a great tragedy that energy policy both in the USA and Europe is now largely formulated based on misunderstandings such as those articulated in this letter. The consequences are a total marginalisation of the wind and renewable energy industry and an almost certain climatic disruption from the enhanced greenhouse effect, as well as increasing and dangerous emphasis on nuclear technology.
It is only by answering such criticisms that the true potential of wind energy and indeed all intermittent renewable energy can be realised.