This paper considers the potential for energy storage in Latvia and Lithuania with a particular focus on electrical energy storage benefiting from price arbitrage. A model to optimize the operation of a generic price-taker storage plant participating in a liberalized market has been created and applied to Kruonis pumped storage plant in Lithuania. The ability of a compressed air energy storage plant to benefit from price spread depending on its size and efficiency has been analyzed as well. The paper is structured as follows: the first section gives a brief overview of the peculiarities of electricity market in Latvia and Lithuania, including a description of currently utilized energy storage options and an overview of compressed air technology; the next chapter describes the mathematical model; the third chapter summarizes the results from the case studies, followed by the conclusions.