The use of renewable energy sources can make a significant contribution to reducing greenhouse gas emissions in the energy sector. However, fluctuating electricity generation from solar or wind power plants leads to a mismatch between energy production and demand as well as potential problems of grid instability. For that reason, large-scale thermal energy storage (TES) systems are one of the promising solutions to overcome these issues and to allow the operation of a sustainable and reliable energy system based on renewable energy sources. A TES system converts electrical energy into thermal energy during power surplus and reconverts thermal energy to electricity by, for instance, a supercritical carbon dioxide (sCO₂) power cycle during power demand. TES has many advantages, such as simplicity, low cost and reliability over alternative storage technologies. The sCO₂ power cycles, on the other hand, offer a variety of advantages, such as a high conversion efficiency, a compact turbomachinery and a temperature glide that fits well with sensible thermal energy storages. To further develop and assess this approach, the EU-project CEEGS (CO₂-based Electrothermal Energy and Geological Storage system) deals with the development of a high-efficient, cost-effective and scalable energy storage technology. Here, transcritical CO₂ cycles are integrated with underground energy storage, to achieve, simultaneously, long-term CO₂ sequestration and, potentially, geothermal heat extraction. During periods of excess electricity generation, the charging cycle is in operation. Here, CO₂ is received from a stationary source, and a motor drives a compressor of a heat pump system to increase the CO₂ pressure. The sCO₂ heats up a hot-water storage while reducing its temperature before entering an expansion turbine. During the expansion the temperature and pressure are reduced and the CO₂ is injected into a geological reservoir, at more than 1 km depth. Within the reservoir, the CO₂ will tend to thermal equilibrium with the reservoir, extracting some heat. Afterwards, the CO₂ cools a cold-water storage, while increasing the temperature. The resulting Carnot battery closes the loop with CO₂ underground injection. During periods of net electricity demand from the grid, the discharging cycle is in operation. Thereby, CO₂ is back-produced from the geological reservoir and pumped through a heat exchanger, where it increases pressure. In the heat exchanger, the stored thermal energy from the hot-water storage is used to evaporate and heat the CO₂. The high-pressure CO₂ drives a turbine to generate electricity and the pressure reduces. The low-pressure CO₂ flows through a condenser, where it is cooled and liquefied by the cold-water storage. Then, it is pumped back into the geological reservoir through another injection well. A lab demonstration on a 200 kW power scale was set up at the Helmholtz-Zentrum Dresden-Rossendorf, in order to proof the CEEGS concept and to enhance the Technology Readiness Level (TRL). Thus, the authors will present the design of the components and the facility as well as first results from operating the cycle. Special attention is paid to the challenges during design and commissioning as well as the dynamic behavior of the facility.