LightSail Energy, a startup that is building a compressed-air energy storage system, just got a big cash infusion. The Berkeley-based company said Monday that it has raised $37.3 million in funding. The series “D” invement round was led by PayPal cofounder Peter Thiel and included the leader of LightSail’s last investment round, Khosla Ventures, as well as Microsoft founder Bill Gates.

LightSail was founded by Danielle Fong (see “Innovators Under 35: Danielle Fong, 24”), who hopes to make it more practical and economical to use clean energy by using tanks of compressed air to store it. While the general idea of storing electricity generated by solar panels or wind turbines as compressed air in a big tank isn’t a new one, it has historically been quite inefficient because the temperature of air can rise to nearly 1,000 °C as it’s being compressed. LightSail takes a different approach by spraying water into the air as it is being compressed to help manage the temperature change.

LightSail’s process works like this: Electricity from a wind turbine drives a motor that powers an air compressor. Water is sprayed into the air during the compression process to absorb heat. The mix of water and air is then ejected from the compressor chamber and sent through an air and water separator, yielding relatively dry air and liquid water, which are stored in large tanks. To harness the energy that has been stored this way, you just run the process in reverse.

The cash will undoubtedly help LightSail move forward: it’s working to ship pilot units of its storage system late next year or the year after.