Due to the increasing generation capacity of intermittent renewable electricity sources and an electrical grid ill-equipped to handle the mismatch between electricity generation and use, the need for advanced energy storage technologies will continue to grow. Currently, pumped-storage hydroelectricity and compressed air energy storage are used for grid-scale energy storage, and batteries are used at smaller scales. However, prospects for expansion of these technologies suffer from geographic limitations (pumped-storage hydroelectricity and compressed air energy storage), low roundtrip efficiency (compressed air energy storage), and high cost (batteries). Furthermore, pumped-storage hydroelectricity and compressed air energy storage are challenging to scale-down, while batteries are challenging to scale-up. In 2015, a novel compressed gas energy storage prototype system was developed at Oak Ridge National Laboratory. In this paper, a near-isothermal modification to the system is proposed. In common with compressed air energy storage, the novel storage technology described in this paper is based on air compression/expansion. However, several novel features lead to near-isothermal processes, higher efficiency, greater system scalability, and the ability to site a system anywhere. The enabling features are utilization of hydraulic machines for expansion/compression, above-ground pressure vessels as the storage medium, spray cooling/heating, and waste-heat utilization. The base configuration of the novel storage system was introduced in a previous paper. This paper describes the results obtained from a transient, analytical, physics-based thermodynamic system model used for the system design and evaluation of three design configurations (including base configuration). The system model captures real gas effects and all loss mechanisms. The model demonstrates an energy storage roundtrip efficiency of 82% and energy density of 3.59MJ/m3. Experimental evaluation of system performance and detailed cost-analysis will be presented in future publications.