This paper presents the modeling and control for a novel Compressed Air Energy Storage (CAES) system for wind turbines. The system captures excess power prior to electricity generation so that electrical components can be downsized for demand instead of supply. Energy is stored in a high pressure dual chamber liquid-compressed air storage vessel. It takes advantage of the power density of hydraulics and the energy density of pneumatics in the “open accumulator” architecture. A liquid piston air compressor/expander is utilized to achieve near-isothermal compression/expansion for efficient operation. A cycle-average approach is used to model the dynamics of each component in the combined wind turbine and storage system. Standard torque control is used to capture the maximum power from wind through a hydraulic pump attached to the turbine rotor in the nacelle. To achieve both accumulator pressure regulation and generator power tracking, a nonlinear controller is designed based on an energy based Lyapunov function. The nonlinear controller is then modified to distribute the control effort between the hydraulic and pneumatic elements based on their bandwidth capabilities. As a result, liquid piston air compressor/expander will loosely maintain the accumulator pressure ratio, while the down-tower hydraulic pump/motor precisely tracks the desired generator power. This control scheme also allows the accumulator to function as a damper for the storage system by absorbing power disturbances from the hydraulic path generated by the wind gusts. A set of simulation case studies demonstrate the operation of the combined system when the nonlinear controller is utilized and illustrates how this system can be used for load leveling, downsizing electrical system and maximizing revenues.