Sensible heat storage: Economics

When cheap power plus a hot rock beats a gas boiler

Sensible stores are among the cheapest storage per kWh, but they sell heat, not electricity, so the test is whether cheap-hour power plus storage beats burning gas. Today that holds only where cheap electricity hours are plentiful or carbon is priced.

Capex versus opex

Capital cost per kWh is low: IRENA puts molten salt at USD 26.1 to 40 per kWh of heat, falling to 21.8 to 25.8 by 2030, and sensible industrial stores at about USD 35 falling to 25. An Australian study assumed USD 40 per kWh for a high-temperature packed bed, with operating cost of USD 0.8 per kWh a year. The five commercial-scale Danish pit stores cost EUR 24 to 48 per m3; at Dronninglund that is about EUR 0.4 per kWh of capacity (calculated), because each m3 is cycled only about once a year. Energy Innovation puts the storage medium at about USD 5 per kWh and a long-term whole battery at about USD 27 per kWh, against about USD 150 for lithium-ion in 2022. There are no stacks to replace.^1101423

Levelised cost of storage

For heat the right measure is the levelised cost of heat. Energy Innovation modelled US thermal batteries delivering heat at USD 35 to 62 per MWh across its cases, against an industrial gas price of about USD 22 per MWh in Texas; a carbon price of USD 51 per tonne would add about USD 10 per MWh to gas heat. A study of 1,000 C alumina calcining in Western Australia, at an 80% renewable share, found heat cost USD 59 per MWh with thermal storage and USD 35 per MWh if surplus power was simply exported, against gas at USD 29.1 per MWh (2021 prices). In Germany in 2024, the IEA found that adding storage to an electric boiler cut its average electricity cost for heat from EUR 161 to EUR 71 per MWh. A US study found stores beat new gas equipment for less than 1% of low-temperature heat demand in its base case (about 2.5% with high gas prices). For comparison, Lazard's 2026 range for a 4-hour lithium battery is USD 210 to 292 per MWh of electricity.^1415161823

Revenue stack and market participation

Most value is avoided fuel bought as cheap electricity: Rondo says its 100 MWh unit charges in the six cheapest hours of each day, and at least six European countries had more than 500 hours of negative power prices in 2025. Stores can also be paid to soak up surplus power or provide demand flexibility. Heat-as-a-service contracts, such as Rondo's 2 MWh unit at Calgren with no upfront cost to the customer, move capex off the host's balance sheet. Modelling for the LDES Council found returns of 6% to 28% for chemical plants (as reported by Mercom).⁵⁶²²²⁷

Sources

1. Innovation Outlook: Thermal Energy Storage IRENA, 2020
2. Rondo Energy's 100 MWh solar-powered heat battery now operational (news report of company claims) ESS News, 2025
3. Thermal storage company Rondo plans 90GWh ramp-up of heat battery gigafactory (news report of company plans) Energy-Storage.news, 2023
4. Seasonal pit heat storage: cost benchmark of 30 EUR/m3 solarthermalworld.org, 2019
5. Bottom-Up Estimates of the Cost of Supplying High-Temperature Industrial Process Heat from Intermittent Renewable Electricity and Thermal Energy Storage in Australia (Profaiser et al., Processes 10, 1070) MDPI, 2022
6. Can low-temperature heat in factories be electrified competitively? IEA, 2024
7. Industrial Electrification in the United States (CAELP report) E3, 2024
8. Lazard's Levelized Cost of Energy+ (LCOE+), July 2026 (LCOS) Lazard, 2026
9. Year of the water battery: global pumped storage capacity surpasses 200 GW (2026 World Hydropower Outlook) International Hydropower Association, 2026
10. Industrial Thermal Batteries: Decarbonizing U.S. Industry While Supporting a High-Renewables Grid (Rissman) Energy Innovation, 2023
11. Thermal storage can expand long-duration energy storage to 8 TW by 2040 (news report of the LDES Council and McKinsey Net-Zero Heat report) Mercom India, 2022