Table: Heat storage technology benchmark (source: Enerdata)

Heat makes up around two-thirds of industrial energy demand and nearly a fifth of global energy use, with most of this produced by burning fossil fuels. As Europe moves to electrify its factories, ‘power-to-heat’ systems will struggle to compete with natural gas unless they can store energy-generating heat when electricity is cheap or abundant, and recover waste heat from intermittent processes. Enerdata has produced a brief, which benchmarks the thermal storage solutions currently available and reviews their potential to make industrial heat both clean and competitive.

According to UNIDO, industry accounted for over 20% of CO2 emissions globally. Taking Europe as an example, the EU has set binding climate objectives through the European Climate Law, which aims to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, and achieve carbon neutrality by 2050, with industry as a key sector in this effort. To achieve this, two major initiatives are in place:

• The European Green Deal, which establishes the overall regulatory framework (green taxonomy, strengthened EU Emission Trading Scheme, energy efficiency directive), 
• The Clean Industrial Deal, launched in 2025 with the aim of making decarbonisation a driver of industrial competitiveness by supporting the electrification of processes, deploying heat storage, and facilitating access to affordable energy for energy- intensive industries.

The deployment of electric boilers and so-called ‘high temperature’ heat pumps is one of the key means of electrification and decarbonisation for industry. The generic term ‘power-to-heat’ designates systems that convert electricity produced from renewable sources into heat. 

These systems are generally composed of an electric boiler or heat pump, heat exchangers, and a thermal battery. They must be able to compete with natural gas, which is currently the primary energy source used for heat production in industry. They must also be capable of adapting to the fluctuating power requirements, temperatures, and needs of industrial processes. As such, deployment poses numerous challenges, such as the need for storage. Thermal storage is a key technology for enabling competitiveness against natural gas because it can optimise the costs of a power-to-heat project, notably through two means:

•  Leveraging energy price fluctuations to produce and store heat during hours of low and negative prices and/or photovoltaic overproduction.
•  Recovering and storing waste heat from intermittent industrial processes and reusing it.

Benchmarking thermal storage technologies

Before presenting the technologies, it is important to note that there are three temperature levels in industry:

• Low Temperature: below 100°C with industrial processes using hot water (food, processing industry, etc.)
• Medium Temperature: between 100 and 300°C with steam and superheated water processes (chemistry, plastics, etc.)
• High Temperature: above 300°C with processes using burners (glass, steel, etc.)

For low temperatures, the most commonly used heat storage materials are water and glycol water. However, new solutions are emerging, such as Phase Change Materials (PCM) or refractory bricks. This temperature segment is the most technologically mature, with numerous projects already implemented. 

This is not the case for the medium and high temperature segments, where no single solution has established dominance and each material has its advantages and disadvantages in terms of efficiency of charge/discharge cycles, energy density, temperature range accepted by the solution, and most importantly, in terms of price. 

Despite the lack of maturity, a general trend is emerging for medium temperature applications, which is the use of readily available and low-cost materials, such as sand, steel slag, crushed rock, or molten salts. Finally, for high temperatures, industrialised technologies are limited to recycled materials such as steel slag, bricks, or ceramics.

Innovative economic models to make industrial heat storage profitable

Industrial thermal storage can prove cheaper than other storage technologies, with investment costs lower than conventional electrochemical batteries. Where a lithium-ion battery requires between €200-300/ kWh, the Enerdata study reports that a sensible thermal storage system, such as Polar Night Energy’s sand battery or Kraftblock’s high-temperature modules, can be installed for €10- 60/ kWh. Additionally, thermal batteries can generate additional revenue, since they can participate in flexibility markets and engage in arbitrage on electricity spot markets. Polar Night Energy, through its sand battery, already takes part in Finland’s primary and secondary frequency reserve markets, achieving a 50% increase in returns over the project’s lifetime compared to a standard electrification project without a battery. It should be noted that the potential earnings from these markets can be highly dependent on local factors.

Despite the competitive nature of the thermal battery itself, its installation must be coupled with energy conversion technologies (electric to thermal) and heat recovery (heat exchangers). The total cost of a power-to-heat project can therefore quickly increase with the electric boiler or heat pump, plus the thermal battery, plus the heat exchangers.

Heat-as-a-service. For an industry typically reluctant to mobilise capital on still-emerging technologies, the Heat-as-a-service (HaaS) model could be a solution. A pioneer of this approach, the Norwegian group Kyoto Group, has deployed its 56 MWh Heatcube at KALL Ingredients in Hungary without any Capex being requested from the industrial client. The Kyotherm investment fund financed the installation via a dedicated SPV company, while KALL signed a 15-year guaranteed-price decarbonised heat supply contract, in complete replacement of its natural gas boilers.

Major projects already implemented.  Numerous battery projects are already being implemented across Europe. One example is the system installed by Finnish startup Polar Night Energy in Pornainen, Finland. This project consists of 2,000 tonnes of soapstone and can reach temperatures up to 500°C. It supplies the local district heating network and has a storage capacity of 100 MWh. For industries requiring large heat volumes, German group Energy Nest inaugurated in 2025 one of Europe’s largest industrial thermal storage systems at the Leonhard Kurz thin film processing plant in Fürth, Germany. This project is composed of a 3 MWe electric heater and a 12 MWhth Thermal Battery™ integrated into the existing thermal oil infrastructure. Another notable example is the industrial electrification project led by German company KraftBlock, which involves deploying two 35 MWh units in a food processing plant. These projects are led by stakeholders with investment- friendly, multi-year visibility into their operations, and no land or operational constraints on hosting storage systems on their sites.

Key Takeaways

• The question of costs is not yet fully resolved. While thermal storage costs are relatively low at €10-60/kWh, the overall cost of electrification projects remains a major barrier, especially in an unstable political and regulatory context that prevents long-term planning.
• Reference projects prove technological maturity. From a sand battery in Finland (100 MWh), to steel slag modules at PepsiCo in the Netherlands, to the molten salt Heatcube in Hungary.
• Innovative financing models exist to remove investment barriers. The complete power-to-heat system cost (boiler plus heat recovery plus storage) represents a block on adoption. The HaaS model could allow industries to decarbonise their heat without CAPEX, via long-term supply contracts financed by third-party investors.