Thermal Energy Storage Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2025 - 2032)

Thermal Energy Storage Market Trends and Growth Drivers

Integration of Renewable Energy Is Key Market Trend

• Amidst the increasing concerns over global warming, air pollution, and fossil fuel depletion, countries are moving toward renewable resources for power generation.
• As per the Global Wind Energy Association, 117 GW of new capacity came online in 2023.
• The DoE projects 560 GW of solar PV additions in 2024 around the world.
• This creates a demand for more-advanced systems for energy storage and grid resilience.
• Thermochemical energy storage provides an efficient and sustainable solution for accumulating the energy generated from renewable resources, such as solar and wind.
• Concentrating solar power systems require efficient energy storage for long durations with minimal degradation.
• TCES provides a reliable and efficient solution for storing the energy generated from CSP installations.
• Amidst the expansion of grids for a reliable power supply and fluctuations in the demand, thermal energy storage systems reduce energy losses. This helps in improving the overall grid stability.
• Governments of various countries are investing in the integration of thermochemical energy storage system across various industries for grid stability and onsite consumption.
• In November 2024, the U.S. Department of Energy announced a loan guarantee of up to USD 305.54 million for IceBrick Energy Assets I LLC, a subsidiary of Nostromo Energy, which will install 193 cold thermal energy storage installations in commercial buildings across California.

Demand for Long-Term Energy Storage Drives Market Growth

• The demand for long-term energy storage is rising on the global level with the integration of renewable energy systems, seasonal energy demand variations, decoupling of energy supply and demand, and rising energy demand for remote and off-grid areas.
• Thermochemical energy storage provides seasonal balancing as it can store the energy produced during summer to be utilized during winters for heating purposes.
• Off-grid and remote areas rely on the expensive and polluting diesel generators, which are becoming increasingly unsustainable in today’s scenario.
• To meet this challenge, TCES is being used as a reliable and cost-effective solution for these areas.
• These systems act as a cost-effective solution for the peak shaving, providing stored energy during high-demand periods without the need for additional infrastructure.
• Many countries are investing in research and development on this technology for enhancing its long-term energy storge capabilities.
• In February 2022, the North Dakota State University began working to develop a nanocellulose-based material for thermal energy storage for remote areas where traditional energy infrastructure is lacking.
• The other entities working on the project, which has received total funding of USD 2,209,783, are Montana State University, Bozeman, MT, Oak Ridge National Laboratory, and Idaho National Laboratory.

Technical Complexity Is Major Challenge in Market Growth

• Unlike conventional energy storage technologies, thermochemical energy storage systems work on complex chemical reactions for the storage and release of electricity.
• This necessitates precise control over reaction parameters, such as temperature and pressure.
• For controlling these parameters and ensuring high operational efficiency, there is a requirement for advanced monitoring systems, which further raises the overall deployment cost.
• Furthermore, these systems consist of chemical composites, which require more safety measures in comparison to conventional energy storage systems.
• The high cost and technical complexity of this technology restricts its usage to large utilities and well-funded industrial enterprises, thus slowing down the market growth to some extent.

Thermal Energy Storage Market Analysis

Technology Insights

The sensible heat storage category, under segmentation by technology, is expected to be the highest revenue generator over the forecast period and advance with a CAGR of around 10.5%.

This will be due to the increase in the demand for thermal energy storage for cooling, heating, and power generation applications. TES using sensible heat relies on the specific heat properties of a storage medium, which is kept in well-insulated storage tanks. Molten salt is the predominant storage medium in this technology in both the industrial and commercial sectors. The biggest reason for the widespread usage of the sensible heat storage technology is its cost-effectiveness. The additional benefits associated with it are high heat diffusivity, thermal conductivity, density, affordability, availability, and ease of handling.

Ice and cold water are used in industries where a large portion of electricity is devoted to powering heating and cooling systems. Ice storage is a prevalent solution to addressing peak energy demands, especially during the summer season. Molten salt mixtures serve the dual purpose of acting as both thermal energy storage and heat transfer fluids, thus reducing the capital cost of the energy system. Phase-change materials (PCMs) play an important role in releasing and storing thermal energy during the freezing and melting phases, in addition to serving as valuable components for thermal insulation and barriers.

Based on technology, the market has the following categories:

• Sensible Heat Storage (Largest Category)
• Latent Heat Storage
• Thermochemical Storage (Fastest-Growing Category)

Storage Material Insights

Molten salt held the largest share, of around 60%, in the storage material segment, in 2023, and it is expected to grow at the highest rate in the coming years. Molten salts are the most-prevalent thermal energy storage medium as they exhibit higher boiling points and remarkable volumetric heat capacities. When energy is required, these salts are pumped to a steam generator, where they facilitate the boiling of water, set turbines in motion, and, ultimately, generate electricity.

Furthermore, these materials provide cost-effectiveness, flexibility, and extended storage capabilities, which is why they have been employed in over half of the operational thermal energy storage projects to date.

Based on storage material, the market has the following categories:

• Water
• Molten Salt (Largest and Fastest-Growing Category)
• Phase Change Materials (PCM)

Application Insights

Based on application, the power generation sector is set to witness a Thermal Energy Storage Market growth rate of around 12.5% in the forecast period. This is credited to the increasing adoption of the CSP technology integrated with energy storage systems. For instance, in 2022, the global installed CSP capacity was 7 GW, and it witnessed a fivefold increase between 2010 and 2020, as reported by the IRENA. This surge in CSP technology adoption is the most easily noticeable in the commercial and industrial domains.

Furthermore, numerous upcoming projects will expand the solar CSP power generation portfolio, with an emphasis on incorporating thermal energy storage systems. For example, in June 2020, Siemens Energy partnered with EnergyNest to develop such systems for industrial customers across the globe.

TES within CSP facilities provides a solution to address the intermittency of solar energy resources, while simultaneously lowering the levelized cost of energy (LCOE), by allowing for power utilization over extended durations. The TES system can gather energy during daytime hours and store it, allowing for its utilization during cloudy conditions or at a later time. As a result, the operational window of a solar–thermal power plant can be prolonged, even during periods of limited direct solar radiation, without the necessity for relying on the combustion of fossil fuels.

Based on application, the market has the following categories:

• Power Generation (Largest and Fastest-Growing Category)
• District Heating & Cooling
• Process Heating & Cooling

End Use Insights

The industrial category holds the largest market share, of around 40%, in 2024.

This is due to the wide use of TCES in the manufacturing, chemical, refining, and food processing industries, which require an appropriate amount of thermal energy for heating, cooling, and other processes.

Furthermore, the residential and commercial category also hod the significant market share in the end user segment due to the rapid growth in the number of commercial projects and heavy industries, including refineries, manufacturing facilities, chemical plants, and several other industrial facilities. Furthermore, the expanding construction & building activities worldwide will serve as a chief driving factor for the thermal energy storage market throughout the projected period. According to the United Nations Environment Programme, buildings & construction activities accounted for over 34% of the worldwide energy demand and 37% of the emissions related to energy and processes in 2021.

Based on end use, the market has the following categories:

• Residential
• Commercial
• Industrial (Largest Category)
• Utilities (Fastest-Growing Category)

Thermal Energy Storage Market Geographical Outlook

Europe held around 40% share in the global market in 2024. European countries' actions to accomplish carbon reduction targets and transition from coal-based power production and the concurrent rise in renewable energy generation support the deployment of CSP plants equipped with storage capabilities. For the past decade, TES systems have been extensively commissioned in urban districts, particularly in Austria, Spain, Central Europe, and Northern Europe. The major reason for such strategic initiatives is to meet the high energy demand during winters, while exploring renewable methods for district heating.

In this regard, the Thermal Energy Storage Market in Europe is propelled by the large consumer base, swift advancement in the TES technology, and presence of major industry players in the region. Furthermore, the presence of expanding economies, such as Italy, Germany, Spain, France, and the U.K., means a rising demand for TES for cooling and heating applications.

The regions and countries analyzed for this report include:

• North America
  • U.S. (Larger and Faster-Growing Country Market)
  • Canada
• Europe (Largest Regional Market)
  • Germany (Largest Country Market)
  • U.K. (Fastest-Growing Country Market)
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia-Pacific (APAC) (Fastest-Growing Regional Market)
  • China (Largest Country Market)
  • Japan
  • India (Fastest-Growing Country Market)
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest and Fastest-Growing Country Market)
  • Mexico
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia (Largest Country Market)
  • South Africa
  • U.A.E. (Fastest-Growing Country Market)
  • Rest of MEA

Thermal Energy Storage Market Share

• The market for thermal energy storage systems is fragmented due to the various players working on their R&D, development, and integration with the grid.
• There is lack in dominancy in the TCES market due to the presence of different technologies, such as calcium hydroxide cycles, metal oxides, and ammonia-based system.

Thermal Energy Storage Market News

• In January 2024, RedoxBlox developed a thermochemical energy storage system to replace traditional natural gas heating systems at industrial sites and enable low-cost storage on the grid scale.
• In June 2024, Burns & McDonnell commissioned Plus Power’s 1-Gwh standalone energy storage facility in Arizona. The facility uses 275 Tesla Megapacks of lithium–iron phosphate battery energy storage systems to provide stability and reliability to the electric grid.