Nowadays, production of electricity and heat from Renewable Energy Sources (RES) is increasing rapidly but, the mismatch of energy generation and consumption is an obstacle for the further development of renewable energy systems which makes depending only in clean energy is not possible, which leads to continuous consumption of fossil fuel and increases in GHG emissions. Energy Storage Systems (ESS) are tackling this problem. In addition, they bring other benefits such as the possibility to sell electricity when prices are high and avoid the cost of backup systems. For over one hundred years, ESS have developed continuously to improve the overall performance of the energy market. In rural areas for developing countries where there is no access to electricity, ESS are critical for off-grid application for renewable energy to achieve poverty reduction and improve living conditions. Compressed Air Energy Storage (CAES) is one of the fastest developing storage technologies able to support utility-scale applications. Small-scale applications are currently under development, and a breakthrough is expected soon. The paper examines the technological and economic feasibility of the Isothermal Compressed Air Energy Storage (I-CAES) technology. The I-CAES technology captures the heat generated by the compression of air and reuses it during the expansion phase, creating a highly efficient storage system, cost-effective and with low environmental impact. The approach of this paper is to study the traditional CAES, i.e., Diabatic and Adiabatic CAES systems and compare it to the I-CAES system to see what the I-CAES system can offer technologically and economically to the existing technology for both large and small-scale applications.