April 2, 2024

A deep impact dive on Thermal Energy Storage

This is Rubio’s deep dive series where we explore what technologies and business model innovations might solve the biggest problems faced by humanity. These deep impact dives will boil down the facts as Rubio sees them to uncover what we would need to see to invest. Our first dive is Thermal Energy Storage, a hot topic for solving industrial emissions and written by investment manager Charlie Macdonald and investment analyst Sophie Wynaendts.

The downlow

  • Thermal Energy Storage could replace over 50% of high temperature industrial heating needs, which are currently primarily powered by fossil fuels.
  • Technologies for heat storage fall into three buckets: sensible heat (mature, but limited temperature range), latent (high energy density, but limited applications), and thermochemical (high potential, but still in research phase).
  • The market opportunity is enormous but storage technology will always be constrained by price, and there is a long way to go for most technologies to come down the cost curve.
  • Price parity with gas, scale of energy capacity, abundance of materials and a capex light model are key factors for an interesting investment case.

Industrial heat is a dirty business

In the ever-evolving landscape of energy consumption, the industrial sector’s voracious appetite for heating and cooling is a pressing challenge. Accounting for a staggering 25% of total final energy consumption(*1) in the European Union, industry relies heavily on fossil fuels, emitting over 500 million tons of CO2 emissions annually in Europe alone (*2). 

Over 60% of these emissions comes from “high temperature” processes like cement or steel (up to 1,500°C), biorefining (up to 600°C) and food & beverage production (up to 400°C), which are powered predominantly by natural gas and coal(*3). And while cleaner heating solutions like renewable powered industrial heat pumps or concentrated solar present promising alternatives for “low temperature” heating needs around the 200°C level, there are few viable alternatives for the hotter stuff.

Emissions reduction potential by process temperature level

Source: EERA (2022). Industrial Thermal Energy Storage

What is Thermal Energy Storage (TES)?

Amidst this dirty business, Thermal Energy Storage (TES) presents a possible solution. Much like your phone battery capturing and storing electrons for later use, Thermal Energy Storage technologies capture and store heat energy. This makes it possible to use intermittent renewables for heat generation and storage, or capture waste heat for reuse, displacing fossil fuels for every joule stored. 

TES combined with renewable power could replace over 50% of current fuel-powered industrial heating processes in iron, steel, cement, chemical production without a fundamental change in set up, and could result in a 30-40% reduction potential in global gas use by mid century if it expands into home heating applications. So, let’s explore how TES is poised to transform industrial heating, offering a sustainable solution that reduces reliance on fossil fuels and strengthens energy system flexibility.

How thermal energy storage fits into the industrial heating system

Source: EERA (2022). Industrial Thermal Energy Storage

Technology approaches to tackle heating needs

The most viable technologies being explored to store heat break down into sensible, latent, and thermochemical approaches, outlined below. 

Technology approach 1: Sensible storage
Stores energy in raising or lowering temperature of a liquid or solid storage medium (e.g. molten salts) 
Temperature range: 0°C – 1000°C
Cost (€ / kWh): 0.1 – 35
TRL: 7 – 9 (i.e. proving commercial scale)

Sensible heating approaches just make sense: apply heat to materials that can have high heat holding capacities like sand or salt, and deploy heat when required. For instance, EnergyNest (NO) has developed a material HEATCRETE® that can store temperatures up to 400°C, Kraft Block (DE) is using upcycled steel for heat storage up to 1300°C, and Antora’s (US) technology heats solid insulated carbon blocks to high temperatures. 

It’s dynamic, cheap and relatively mature technology that already has commercial scale. However, sensible TES setups can be more challenging for high temperature use cases and don’t have the storage capacity that other approaches may have in future. 

Technology approach 2: Latent storage 
Stores energy during phase change of materials (e.g., ice)
Temperature range: -100°C – 1000°C
Cost (€ / kWh): 60 – 230
TRL: 4 – 7 (i.e. scaling up technology)

Latent heat storage captures energy around the phase change of materials, like water which requires less energy to drop from 1°C  to 0°C  degrees than it does from 0°C  to -1°C  when it freezes. For example, Energy Dome launched a demonstration facility in Italy for the thermodynamic cycle of CO2 releasing energy as it changes between liquid and gaseous states for long duration storage, while MGA Thermal (AU) is working with molten alloys that store latent energy between solid and liquid states.

Relative to sensible heat, latent heat has 3x the energy density requiring less area for the same storage capacity and keeps at a constant temperature making it suitable for stable industry processes. However, it is only effective within a small temperature range where the material changes phase, and the specific materials required can be rare and expensive. 

Technology approach 3: Thermochemical storage
Stores energy in a reversible chemical reaction
Temperature range: 50°C – 1800°C 
Cost (€ / kWh): N/A (research phase!)
TRL: 3 – 5 (i.e. early stage research)

Thermochemical storage captures heat from the reaction between two substances. While most technologies are in stealthy research phases, promising ventures include SaltX (SE), which is using renewable powered plasma to replace high temperature industrial processes, while RedoxBlox (US) is working on a redox material that can generate temperatures up to 1500°C on demand.

Thermochemical has the potential to have the highest energy density of any technology while delivering higher temperatures to begin addressing processes like cement and steel production that require more than 1000°C. However, most use cases are theoretical at this stage and there’s a long way to go. 

The market and competitive landscape landscape

The European Energy Research Alliance estimates TES could replace up to 1,793 TWh of fossil fuels, worth €200b by current fossil fuel prices in Europe alone. 

It’s a big prize, but his market opportunity will only be realised once technologies can demonstrate price competitiveness with fossil fuels, and frankly there’s still a fair way to go.  Gas prices in 2024 set a benchmark of just €0.12 per kWh(*4), meaning sensible heat is the only technology that’s close to competitive and only then in niche use cases, with long payback periods exceeding 10-15 years at best. This piles on top of non-technical challenges like simple lack of awareness and the change in business model required to own a storage asset. 

Nonetheless, we’re excited by the emergent TES demonstration projects with more than 400MWh of storage capacity set to come online by end of 2024, about enough for 70 tonnes of steel production (Cleantech Group). It’s baby steps compared to the billions of tonnes of steel made every year, but they could start a wave of industry transition towards cleaner practices, accelerated by regulatory and consumer pressures. 

Landscape of thermal energy storage approaches by temperature level

Source: Cleantech Group (2023). Spotlight: Thermal Energy Storage. 

What we’d need to see to invest

As industry grapples with its sasquatch sized footprint, the combo of electrification and TES is a potential game-changer. Molten salts and thermochemical solutions could finally decarbonise hard to abate processes above 200-500°C degrees while creating new systems built around efficient use of renewable power assets.

From an impact perspective, the higher the temperature requirement, the more value in TES because these processes need more energy and are harder to electrify. From a commercial perspective, TES technologies must compete with gas prices while delivering attractive asset economics for investment (the Rubio view is that <15 year payback is the minimum to match best performing gas turbines, and ideally 5-8 years for “no brainer” adoption). Additionally, most industrial applications will require at least large enough capacity to ensure smooth continuity of thermal energy supply. 

In sum, an interesting TES business for Rubio would need to demonstrate the following:


  • Max achievable temperature > 500°C – Where the impact of industrial TES is greatest
  • Energy capacity (> 150 MWh) – To meet the minimum requirements of most industrial processes
  • Materials are not difficult to procure – To ensure low costs and market growth


  • Payback period on capex < 5-8 years – To attract capital investment
  • Pathway to price parity with gas – To compete with incumbent heating option
  • A business model that tackles high upfront capex costs – To ensure capital raising doesn’t slow business growth

Are you already there with your technology? Contact us here.

  1. EERA (2022). Industrial Thermal Energy Storage.
  2. Koffi, B. et al. (2017). Covenant of mayors for climate and energy: Default emission factors for local emission inventories. Joint Research Centre (JRC).
  3. Eurostat. (2021). Energy Balances.
  4. EuroStat (2023). Average EU price in 2023: 0.12 € / kWh. Natural gas price statistics.