In their market report, “Thermal Energy Storage 2024-2034: Technologies, Players, Markets, and Forecasts”, IDTechEx predicts that there will be more than 40 GWh of thermal energy storage deployments across the industry in 2034.

While TES will be a key technology to decarbonize industrial heating systems, there are also players developing other technologies, such as carbon capture and storage (CCUS), heat pumps, hydrogen, and electrification technologies, such as electric arc furnaces (EAF). Will compete. Funding from states and governments. Therefore, it is important to examine the various drivers and initiatives that will influence where the TES market is expected to grow the most over the coming decade.

Key drivers for decarbonising industrial heating in Europe

Natural gas prices in Europe have risen in recent years due to geopolitical conditions and fears of strikes among key exporters. In Europe, natural gas prices have increased and been more volatile in recent years. This is largely due to the influence of the Russia-Ukraine war, which saw European natural gas prices rise from €10-20/MWh to €300/MWh before 2022.

These prices rarely return to pre-2021 prices, and other increases in natural gas prices have been fueled by fears of strikes by LNG exporters in Australia. These fluctuations and rising natural gas prices will likely be key drivers for the development of technologies to decarbonize industrial heating systems in Europe, including TES.

The European Commission has implemented the EU Emission Trading System (EU ETS), which sees companies penalized for exceeding a given emissions limit. This limit will be reduced every year to ensure that emissions from the industry will decrease over time. Companies can bid for allowances on a common auction platform, which is conducted on the European Energy Exchange. As companies in the EU are paying for the extra GHG they emit, they are either able to buy carbon allowances or hopefully incentivized to invest in technologies to deliver low-carbon heat.

Funds received by Member States are mostly used to support climate-related efforts, and from 2013-2019, approximately 78% of the revenues received were allocated to these purposes. This funding is earmarked for the EU Innovation Fund. In November 2023, the EU Commission opened a €4B fund to support the deployment of decarbonization technologies, building on its previous two rounds of €3B and €1.8B in 2022 and a second round of €1.1B in 2021. . This funding will be used Support decarbonisation projects, which may include energy storage technology, heat pumps and hydrogen production.

As suggested in IDTechEx’s market report, players developing thermal energy storage technologies may be eligible for part of this funding, but specifically provide players developing and commercializing TES technologies. The amount of funding to go is unknown.

Key drivers of decarbonizing industrial heat in the US and Australia

TES technologies will be less competitive with natural gas in the US, as the US has a large volume of domestic natural gas production and is a net exporter. However, in 2022, the US Department of Energy (DOE) launched the Industrial Heat Shot.TM Initiative to develop cost-competitive industrial heat decarbonization technologies. In 2022, the DOE announced that it would provide a “$70 million funding opportunity” in federal funding over the next five years to develop projections focused on low-carbon process heating technologies.

However, in 2022, $300M was requested by players, and $385M in 2023, suggesting that funding demand for the development of low-carbon process heating technology is more than the amount currently being provided. Regardless, TES technologies are expected to grow in the US, although players developing other decarbonization technologies will compete for funding.

End-user natural gas prices in eastern Australia generally reflect prices in Western Europe. While Eastern Australia has its own production of natural gas, domestic liquefied natural gas (LNG) consumption is comparable to export volumes.

In general, Australia’s export volumes far exceed total gas demand, and gas production costs are high. This would potentially make TES technologies more cost-competitive with natural gas at levels similar to Europe than in the US. Additionally, in November 2023, the Australian Renewable Energy Agency (ARENA) launched a ~$260M fund called the Industrial Transformation Stream (ITS). The first round of funding will provide AU$150M in funding for the decarbonisation of industrial heating processes and the decarbonisation of off-road transport. Therefore, TES players in Australia are potential contenders to receive this funding.

Thermal Energy Storage Regional Market Outlook

Key players in interviews with IDTechEx have commented that most decarbonisation projects are currently using support funds from state or government grants. As detailed in IDTechEx’s market report, as of January 2024, TES players have raised more than $600M in funding, though not all of it through state or government grants. Over the next few years, most industrial TES growth is expected in Europe, with more than 275 MW of projects planned to be deployed by 2025.

Two major projects in the US and China will see GWh-scale deployments of a 1.2 GWh electrothermal energy storage (ETES) system by Ecogen Power Systems in the US and a 1.1 GWh TES system by CHN Energy at a power plant in China. Rondo Energy is also planning to deploy 2 GWh of TES for industrial heating applications, apparently in multiple projects, although the locations are currently unknown.

These deployments skew the outlook from a TES capacity perspective, although the stated factors of high and volatile natural gas prices, the implemented EU ETS, and support from the EU Innovation Fund will be the main drivers in Europe. TES create market growth opportunities. The Next Decade Although it is difficult to determine the exact amount of funding that will be provided for the development of TES technologies, it is clear that other countries, such as the US and Australia, are directly supporting the decarbonisation of industrial heating systems. are, and will be, other important regions for TES. growth in the medium term.

the author: Conrad Nichols, Senior Technology Analyst at IDTechEx

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