Thermal Energy Storage Market (By Technology: Latent, Thermochemical, Sensible; By Storage Material: Molten salts, Water, Phase change materials, Others; By Application: Process Heating and Cooling, Power Generation, District Heating and Cooling; By End User: Utilities, Residential & Commercial, Industrial) - Global Industry Analysis, Size, Share, Growth, Trends, Regional Outlook, and Forecast 2023-2032

The global thermal energy storage market size was exhibited at USD 25.38 billion in 2022 and is projected to hit around USD 62.68 billion by 2032, growing at a CAGR of 9.46% during the forecast period 2023 to 2032.

Key Pointers:

• By technology, the sensible storage segment has captured 85.8% of the total share in 2022.
• By storage material, the molten salt segment is growing at a CAGR of 9.4% during the forecast period.
• By application, power generation segment has accounted market share of around 61% in 2022.
• By end user, the industrial segment has accounted 41% market share in 2022.
• In 2022, Europe dominated the market with 38.6% of the total market share.
• The growth of the global thermal energy storage market is backed by increasing demand for electricity during peak hours, increasing commercialization of CSP plants, and demand for heating & cooling applications for smart infrastructure.

Thermal Energy Storage Market Report Scope

COVID-19 Impact on the global thermal energy storage market

At the start of 2020, the development of renewable energy technologies in several markets was already challenged by financing, policy uncertainties, and grid integration, which has been intensified further by COVID-19. According to the IEA, the COVID-19 crisis has significantly impacted the global growth in renewable power capacity addition. According to the IEA estimates, the number of new renewable power installations worldwide is set to fall in 2020 as a result of the unprecedented global COVID-19 crisis. This marks the first annual decline in 20 years since 2000 for renewable energy capacity addition. The net additions of renewable electricity capacity in 2020 are projected to decline by 13% compared with 2019.

The decline is represented by delays in construction activities due to supply chain disruptions caused mainly by China, lockdown measures across all major economies, social-distancing guidelines for workers, and the subsequent financing challenges. In 2021, renewable energy capacity addition is projected to increase with the resumption of the majority of the delayed projects. This will lead to a rebound in new installations, and as a result, the next year is forecast to reach the same level of renewable electricity capacity additions as in 2019. This will be further supplemented by supportive government policies for renewable energy technologies in multiple countries. In addition, countries are likely to make investments in renewables a key part of stimulus packages to reinvigorate their economies. Advancements and investments in renewable technologies, such as solar and wind, can also help in economic development by creating jobs, reducing emissions, and fostering innovation. For the analysis of the COVID-19 impact on the market, we have considered key parameters such as the impact of COVID-19 on electricity demand and power sector investment. The IEA forecasts that renewable electricity capacity additions will decline by 13% in 2020, while CSP installed capacity additions will decline by 38% in 2020 as compared with 2019, the first downward trend since 2000. The COVID-19 impact is further intensified by policy uncertainties associated with the newly financed renewable energy projects, just before the COVID-19 outbreak. According to the Union of the Electricity Industry (Eurelectric AISBL), new investments by utilities are likely to decrease by 10 to 15% due to the COVID-19 outbreak. All these factors have been considered for the scenario analysis of COVID-19 impact on the global thermal energy storage market. 

Thermal energy storage Dynamics

Driver: Demand for energy storage for supplementing ever-increasing solar energy generation  

Decarbonization of the energy sector and reduction of carbon emissions in order to cap the global climate change are some of the most hegemonic goals for governments, energy authorities, and utilities across the world. According to IRENA, accelerated deployment of renewables, along with electrification and increasing energy efficiency of electric grid, can help to achieve over 90% of the energy-related carbon dioxide (CO2) emission reductions required to meet the Paris Climate targets by 2050.

According to IRENA, global renewable energy installed capacity in 2019 was 176 GW higher than that in 2018—an increase of 7.4%. Generation growth returned to its long-term trend, due to a recovery in the hydropower sector. Solar generation continues to grow strongly; in 2018, solar overtook bioenergy to become the third largest source of renewable electricity generation. Solar and wind generation in 2018 increased by 28% and 11%, respectively. Collectively, these 2 sources of energy continue to dominate renewable energy generation, accounting for 73% of growth since 2014. Solar energy has experienced an average annual growth rate of 49% globally due to strong federal policy mechanisms to encourage the adoption of the energy, Investment Tax Credit for solar power, and increasing demand for clean energy from both public and private sectors across all major economies in North America, Europe, and Asia Pacific region. According to the Renewable Energy World, in China, power generation from renewable energy sources reached up to 1,870 TWh in 2018 (26.7% of the country’s total), which is an increase of 170 TWh. Hydro contributed 1,200 TWh (increased by 3.2%), wind contributed 366 TWh (increased by 20%), PV contributed 177.5 TWh (increased by 50%), and biomass contributed 90.6 TWh (increased by 14%) to the country’s overall energy generation from renewables. In November 2018, the National Energy Administration of China disclosed that it might increase its solar target in 2020 to at least 210 GW and has the potential to reach as high as 270 GW. This will significantly impact China’s annual capacity additions.

The Government of India has set a target of installing 175 GW of renewable energy capacity by 2022; this includes adding 60 GW from wind, 10 GW from bio power, 100 GW from solar, and 5 GW from small hydropower to its overall renewable capacity. Similarly, the Spanish government raised its renewable energy target to 74% by 2030, and also aims to add 157 GW of renewable energy capacity.

According to the IEA, CSP generation increased by an estimated 34% in 2019 and is expected to grow in coming years as well. This can be achieved through continuous policy support to CSP projects across the Middle East and Africa, Asia Pacific, and North America regions. Thermal energy storage stocks solar thermal energy by cooling or heating a storage medium, such as sand, rocks, water, and molten salt, in order to use the stored energy later for cooling and heating applications and power generation. Thermal energy storage is important for electricity storage in concentrating solar power plants in which solar heat can be stored for the production of electricity when sunlight is not available. This facilitates uninterrupted operations of CSP plants. Some of the key CSP thermal energy storage technologies include single-tank thermocline system, two-tank indirect system, and two-tank direct system. The advantages of thermal energy storage in CSP plants include better reliability, increase in overall efficiency, reductions in investment and running costs, and economical operations. It can also reduce the emission of carbon dioxide. Thus, integration of thermal energy storage in CSP plants is likely to drive the market growth.

Restraint:  Competition from battery storage and pumped-storage  

Being able to differentiate between the perks of battery and thermal energy storage, two of the most common solutions available, is vital for utilities and power plant operators considering deployment in the near future. Choosing the appropriate technology ensures that the installation helps a commercial facility to consume electricity in as cost-effective manner as possible. Batteries are great for providing backup power for lighting, elevators, and computers whereas thermal energy storage is a building's easiest way of reducing peak electric demand. Air conditioning makes up a third of energy costs in summer months and it would be highly inefficient and costly to store energy in a battery only to have it transformed yet again to create instantaneous cooling. In contrast, the entire building load cannot be backed up with just thermal storage.

In the US, pumped-storage hydropower (PSH) is by far the most popular form of energy storage which accounts for 95% of utility-scale energy storage. According to the US Department of Energy (DOE), 2019, pumped-storage hydropower has increased by 2 GW in the past 10 years.

Most of the battery storage projects that system operators (ISOs/RTOs) develop are for short-term energy storage and are not built to replace the traditional grid. Most of these facilities use lithium-ion batteries, which provide enough energy to shore up the local grid for approximately 4 hours or less. These facilities are used for grid reliability, to integrate renewables into the grid, and to provide relief to the energy grid during peak hours.

Although, Thermal energy storage demands for lower project costs but it is less preferred over battery storage and pumped-hydro storage due to their lower efficiency at economies of scale. Thus, these substitutes act as barriers to the growth of the thermal energy storage market.

Opportunity: Decentralization of renewable energy sector 

The deployment of decentralized renewable energy is powering a disrupting transformation of the energy sector. The speedy growth of decentralized renewable energy technologies is likely to change the structure of the energy sector towards a multi-operator set-up in which large utilities interact with captive consumers and mini-utilities. Renewable energy distributed through the grid, as well as through mini-grids and off-grid installations, have provided power to 30% of the people who have gained access to electricity since 2000. To achieve 100% electrification rate by 2030, the share of decentralized renewable energy share will need to increase significantly. For over 70% of those who gain access in rural areas, decentralized systems based on renewable energy will be the most cost-effective solution.

Industrial bulk consumption, self-consumption, and the application of distributed storage can yield benefits for both end users and the power system as a whole. Therefore, thermal energy storage technology is expected to gain opportunities in the coming years. However, costs related with storage projects need to be reduced and become cost-efficient at scale to observe increased deployment.

Challenge: High initial set-up costs varying with technology

The cost of thermal energy storage technologies depends on application, size, and thermal insulation technology. Costs of phase change material- and thermo-chemical storage-based thermal storage systems are usually higher in comparison to the cost of storage capacity they provide. The cost of storage systems constitutes nearly 30% to 40% of the total system cost. Continued research into energy storage technologies to drive down the upfront capital requirement is anticipated to make thermal energy storage technologies more competitive in the near future.

Sensible heat storage offers a storage capacity ranging from 10 kWh/t–50 kWh/t and storage efficiencies between 50%–90%, depending on the specific heat of the storage medium and thermal insulation technologies. PCMs can offer higher storage capacity and storage efficiencies in the range of 75%–90%. In most cases, storage is based on a solid or liquid phase change with energy densities on the order of 100 kWh/ m3 (e.g. ice). TCS systems can reach storage capacities of up to 250 kWh/t with operation temperatures of more than 300°C and efficiencies from 75% to nearly 100%. The cost of a complete system for sensible heat storage ranges between Euros 0.1/kWh–10/kWh (USD 0.11/kWh–10.7/kWh), depending on the size, application, and thermal insulation technology. The costs for PCM and TCS systems are higher in general. In these systems, major costs are associated with the heat (and mass) transfer technology, which has to be installed to achieve a sufficient charging or discharging power. Costs of latent heat storage systems based on PCMs range between Euros 10/kWh–50/kWh (USD 10.7/kWh–53.5/kWh) while TCS costs are estimated to range from Euros 8/kWh–100/kWh (USD 8.56/kWh–107/kWh). The economic viability of a TES depends heavily on application and operation needs, including the number and frequency of storage cycles. 

Some of the prominent players in the Thermal Energy Storage Market include:

• BrightSource Energy Inc.,
•  SolarReserve LLC,
•  Caldwell Energy, 
• Cryogel, 
• Steffes Corporation,
•  Abengoa SA, 
• Terrafore Technologies LLC,
•  Ice Energy, 
• Baltimore Aircoil Company

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2032. For this study, Nova one advisor, Inc. has segmented the global Thermal Energy Storage market.

By Technology

• Latent
• Thermochemical
• Sensible

By Storage Material

• Molten salts
• Water
• Phase change materials
• Others

By Application

• Process Heating and Cooling
• Power Generation
• District Heating and Cooling

By End-User

• Utilities
• Residential & Commercial
• Industrial

By Region

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa (MEA)