Thermal Energy Storage Market in 2025: A Commercial and Strategic Analysis

The global energy transition has placed a spotlight on energy storage as a critical enabler for integrating intermittent renewable sources and enhancing grid stability. In 2025, the Thermal Energy Storage (TES) market is transitioning from a niche technology to a commercially viable and strategically important sector. While Thermochemical Energy Storage (TCES) remains a promising area of research and development, the market’s most significant commercial successes are currently being realized through more mature sensible heat and phase-change material technologies.

This report provides a detailed analysis of three distinct, successful TES case studies, each representing a unique market vertical and business model:

1. Siemens Gamesa: Demonstrates utility-scale, long-duration storage with its Electric Thermal Energy Storage (ETES) system, showcasing a powerful business model centered on repurposing legacy fossil fuel infrastructure.
2. EnergyNest: Illustrates the commercial viability of TES for industrial decarbonization, where the primary value is not grid arbitrage but the reduction of emissions and the achievement of corporate sustainability objectives.
3. Axiom Cloud: Exemplifies a scalable, distributed energy solution for the commercial retail sector, leveraging a software-as-a-service (SaaS) model to aggregate small-scale refrigeration systems into a “virtual battery” for demand response and energy efficiency.

Collectively, these case studies demonstrate that the TES market is not a monolith but a dynamic ecosystem of diverse, tailored solutions. The success of each company is predicated on a business model that aligns with the specific needs of its target market, whether that is grid resilience, industrial sustainability, or distributed energy management.

The Thermal Energy Storage Market in 2025: An Overview

Market Landscape and Macro-Economic Drivers

The energy storage market in 2025 is characterized by a confluence of ambitious policy targets, significant government funding, and a strategic imperative for technological diversification. Global commitments, such as the COP29 pledge, have set an aggressive target to increase worldwide energy storage capacity six-fold from 2022 levels, aiming for 1,500 GW by 2030. This macro-level objective provides a powerful and sustained incentive for the development and deployment of a wide range of storage technologies.

This ambitious push is supported by a favorable policy environment in key markets. In the United States, the Inflation Reduction Act (IRA) includes a direct investment tax credit for stand-alone storage, which significantly de-risks new projects and makes them more financially attractive to investors. Similarly, the Department of Energy has allocated up to $100 million in funding specifically for pilot-scale projects that utilize non-lithium technologies for long-duration systems, signaling a clear governmental prioritization of alternative solutions.

Globally, China has emerged as a dominant force, with strong government targets driving investment in grid-connected batteries and other storage projects. The country has a goal to install at least 40 GW of battery storage by the end of 2025, complementing its broader development of non-battery systems, such as the world’s largest flywheel energy storage project connected to the grid in 2024. The European Union and Spain have also demonstrated a commitment to expanding storage capacity through financial and legislative backing.

This policy-driven acceleration reveals a fundamental shift in the energy storage landscape. The market’s momentum is not solely a function of technological advancement but is heavily dependent on supportive regulatory frameworks and direct financial incentives. This context explains why solutions like thermal energy storage, which may have previously been considered too capital-intensive or unproven, are now finding clear pathways to commercialization. This push is also inextricably linked to a growing need for energy system resilience and a desire to reduce dependence on a single technology or material, particularly lithium-ion batteries.

Defining Thermal Energy Storage (TES): A Nuanced Perspective

Thermal Energy Storage encompasses a variety of methods for storing energy as heat or cold. This report focuses on technologies that are successfully moving beyond pilot projects and into commercial reality in 2025. It is important to make a distinction between the primary categories of thermal storage:

• Sensible Heat Storage: This is the most common and commercially advanced method. It involves raising the temperature of a solid or liquid medium, such as molten salt or volcanic rock, to store thermal energy. The case studies for Siemens Gamesa and EnergyNest fall into this category.
• Phase-Change Materials (PCMs): These technologies store and release energy during a change in state, typically from solid to liquid. The provided research on companies like Ice Energy and Calmac, which specialized in ice-based cooling, illustrates this approach for commercial and residential applications.
• Thermochemical Energy Storage (TCES): This method stores energy in the reversible chemical bonds of a material. While highly promising for its high energy density and long-duration capabilities, the available evidence indicates that this is a developing technology. For instance, the research mentions a study on magnesium chloride and ammonia as a TCES material and a company, SaltX Technology, that is actively developing electric calcination. However, the most recent information from mid-2025 notes that SaltX’s major installations are slated for the first half of 2026, with no detailed case studies or financial outcomes yet available from new partnerships.

For this reason, to provide a report with realistic, precise, and successful case studies, the focus has been placed on the most commercially mature segment of the TES market. The Siemens Gamesa, EnergyNest, and Axiom Cloud case studies provide concrete evidence of successful implementation and quantifiable outcomes, representing the current state of the art in the broader thermal energy storage industry.

Case Study 1: Siemens Gamesa’s ETES for Grid-Scale Integration

Company Profile and Core Offering

Siemens Gamesa Renewable Energy is a global leader in the renewable energy sector, with a primary focus on wind power solutions. In a strategic move to address the inherent intermittency of wind and solar, the company developed its innovative Electric Thermal Energy Storage (ETES) system. This technology is a “Power-to-heat-to-power” solution, designed to store surplus electrical energy for grid-scale applications. At its core, the system utilizes a resistance heater to convert electrical energy into hot air, which is then used to heat a massive insulated container filled with approximately 1,000 tonnes of globally available, low-cost volcanic rock to temperatures as high as 750°C. When electricity is needed, a steam turbine is used to convert the stored thermal energy back into electricity. This system effectively decouples the generation of electricity from its consumption, a key challenge for a grid increasingly reliant on renewables.

The Hamburg-Altenwerder Pilot Plant: A Detailed Case Study

In a significant milestone for the energy storage sector, Siemens Gamesa commissioned the world’s first ETES pilot plant in Hamburg-Altenwerder, Germany. Opened in 2019, this facility was designed to serve as a demonstrator for the technology’s operational viability and its potential for grid integration. The pilot plant is capable of storing up to 130 MWh of thermal energy for up to a week, showcasing its long-duration storage capability. A key objective of the project was to extensively test the heat storage on the grid and provide a proof of concept for future commercial-scale deployments. The project was a collaborative effort, funded by the German Federal Ministry of Economics and Energy, and included partnerships with Hamburg Energie GmbH and the Hamburg University of Technology (TUHH). This collaboration highlights the importance of public-private partnerships in bringing complex, large-scale energy technologies to market.

Operational Outcomes and Proprietary Technology

The Hamburg-Altenwerder pilot plant successfully demonstrated the operational feasibility of the ETES system. The technology proved capable of storing large quantities of energy cost-effectively and then releasing it back into the grid via re-electrification. The core innovation lies in the proprietary insulated container filled with the volcanic rock, which was a major focus of the company’s research and development. Beyond this innovation, a strategic decision was made to utilize standard, off-the-shelf components wherever possible. For instance, the system employs fans and heating elements from series production for the charging cycle and a highly dynamic Siemens steam boiler and turbine for the discharging cycle. This use of proven, standard components helps to de-risk the technology, streamline the supply chain, and reduce both construction and operating costs. The project confirmed that the storage capacity of the system remains constant throughout repeated charging cycles, a critical advantage for long-term viability.

Market Impact and Financial Implications

The ETES system presents a compelling financial and strategic proposition. Its low-cost storage medium—globally available volcanic rock—provides a significant cost advantage over competing systems. For larger capacities, the technology’s capital expenditure (CAPEX) is up to 10 times lower than battery systems, and in commercial operations, the storage costs are projected to be well below ten euro cents per kilowatt-hour. Furthermore, a doubling of capacity only requires doubling the storage volume, not the cost, a significant economy of scale that is not available with lithium-ion batteries.

However, the most profound market impact of this technology is its “second-life” application. ETES offers a strategic pathway to convert decommissioned conventional power plants into high-performance, emission-free energy storage facilities. This model allows for the reuse of a majority of the existing infrastructure, including grid connections, turbines, and generators. This not only provides a solution for grid stability and the curtailment of renewable energy but also gives valuable legacy assets a new purpose, mitigating the negative economic and social effects of power plant closures. By transforming a liability into a valuable component of the clean energy grid, Siemens Gamesa is creating a new, high-value market segment. This approach fundamentally alters the competitive landscape by positioning the company not just against other storage providers, but against long-duration solutions that have significant geological constraints, such as pumped hydro or compressed air energy storage.

Case Study 2: EnergyNest’s ThermalBattery™ for Industrial Decarbonization

Company Profile and Core Offering

EnergyNest is a Norwegian company specializing in industrial-scale thermal energy storage systems. The company’s core product is the ThermalBattery™, a modular and scalable solution designed to store energy in the form of high-temperature heat. The system’s key component is HEATCRETE®, a proprietary concrete-like storage material developed in collaboration with HeidelbergCement. This material allows the ThermalBattery™ to store large quantities of thermal energy over long periods with minimal performance degradation and a projected lifetime of 30 to over 50 years. The modular design, which allows each module to be shipped as a standard 20-foot ISO container, makes the technology highly adaptable and suitable for integration into a wide range of industrial applications.

 The YARA International & Avery Dennison Projects: A Dual Analysis

EnergyNest has demonstrated the commercial viability of its technology through several projects in the industrial sector. Two notable case studies illustrate its diverse applications:

• YARA International: A 4 MWh ThermalBattery™ was integrated directly into the steam grid of a YARA fertilizer production facility in Norway. The primary function of the system is to provide steam grid balancing, which unlocks new operational flexibility for the chemical plant.
• Avery Dennison: Located in Turnhout, Belgium, this project, commissioned in September 2023, represents a clear case of industrial decarbonization. In partnership with bv Azteq, a Concentrated Solar Thermal (CST) platform was installed to shift the factory’s heat production from natural gas to renewable solar energy. The ThermalBattery™ was integrated to balance the intermittent solar production, storing excess heat for use during the night or on cloudy days, ensuring a continuous supply of high-temperature heat for the factory’s drying ovens.

Commercial Outcomes and Lessons Learned

While the available information does not provide direct financial metrics like return on investment in dollars, the outcomes of the Avery Dennison project reveal a different, yet equally powerful, value proposition. The installation, which includes a CST platform with 2,240 mirrors, is capable of providing the thermal equivalent of

GWh of gas consumption annually. This shift is projected to reduce the plant’s greenhouse gas emissions by an average of

9% per year.

This framing of outcomes—quantified in terms of gas replaced and emissions reduced—suggests that the primary business case for this deployment is not short-term financial arbitrage. Instead, it is driven by a long-term, strategic objective to meet corporate sustainability goals and reduce a company’s exposure to future carbon taxes and volatile fossil fuel prices. The value lies in operational resilience and ESG compliance. The ability of the ThermalBattery™ to provide high-temperature heat on demand, day and night, is crucial for industrial processes that require a consistent energy supply, demonstrating that the technology can secure operational continuity while also decarbonizing a “hard-to-abate” sector. The fact that the installation was supported by a variety of funding mechanisms, including the European Union’s Horizon 2020 program, also points to the strategic importance of these projects for advancing the broader energy transition.

Case Study 3: Axiom Cloud’s Refrigeration Thermal Energy Storage for Commercial Retail

Company Profile and Core Offering

Axiom Cloud, headquartered in Oakland, California, operates as a leader in AI and SaaS-driven refrigeration management solutions. The company’s core offering is a software platform that transforms commercial refrigeration systems into intelligent, flexible energy assets. While the company began with a hardware-based “Refrigeration Battery” that stored cooling by freezing saltwater , its more recent and commercially successful offering is a “Virtual Battery” app. This software-centric model is designed to optimize energy usage, reduce operational costs, and generate demand response revenue for customers without requiring the installation of new hardware.

The Specialty Grocer Partnership: A Detailed Case Study

A compelling case study involves a mid-sized specialty grocer that deployed Axiom Cloud’s AI-powered Energy Efficiency Module to more than 100 of its stores. For grocery retailers, refrigeration accounts for a significant portion of total electricity spend, often exceeding 50%. The grocer recognized the potential for savings but found it difficult to identify opportunities within the vast amount of data from its refrigeration controllers. The solution was a software overlay that continuously monitors the performance of the existing refrigeration systems, identifies energy efficiency anomalies, and provides actionable insights. The key challenge the grocer faced was that optimal energy efficiency settings were routinely disabled by technicians during maintenance and then never re-enabled, leading to hidden energy waste.

Financial and Operational Outcomes

The outcomes of this partnership were both financially and operationally significant. Within the first year of implementation, the grocer realized $158,600 in annual cost savings and a reduction of 755,000 kWh in electricity usage. This success aligns with the company’s broader claim that its customers achieve an

11% reduction in energy bills. The business model is structured as a “savings-as-a-service,” which requires no upfront capital from the customer, allowing them to reserve capital for revenue-generating activities.

Beyond the direct financial savings, the operational benefits were substantial. Axiom’s software identified and addressed 43 energy efficiency anomalies in the first year, which resulted in a reduction of 295 metric tons of CO₂e emissions. The proactive, AI-powered monitoring also detected issues before they could lead to equipment failures or food safety concerns, extending the useful life of costly refrigeration equipment and reducing wear and tear. This model provides the benefits of continuous commissioning at a fraction of the cost of traditional methods, preventing the typical 2% annual energy performance drift that occurs without proactive monitoring.

Scalability, Market Impact, and the “Virtual Battery” Model

The Axiom Cloud case study highlights a powerful commercial pathway for thermal energy storage that is distinct from utility-scale or industrial projects. The company’s pivot to a SaaS-driven model demonstrates that the most valuable part of a thermal storage system may not be the hardware itself, but the software that optimizes and aggregates a distributed network of systems. This approach allows a distributed network of thousands of small-scale thermal batteries—in the form of supermarket refrigeration systems—to be managed as a collective “virtual battery”. This distributed energy resource can participate in demand response programs, generating new revenue streams for the customer and providing valuable grid services that help balance supply and demand. The protectional value is therefore rooted not in a physical component but in the intellectual property of the AI algorithm, which is highly scalable and can be deployed rapidly across a vast market of commercial retailers.

Strategic Analysis and Outlook

Comparative Insights: A Cross-Case Study Analysis

The three case studies analyzed in this report—Siemens Gamesa, EnergyNest, and Axiom Cloud—offer a comprehensive view of the diverse and dynamic thermal energy storage market in 2025. While their technologies and target markets differ, their collective success reveals key strategic trends. The table below provides a summary comparison of their distinct business models and value propositions.

Market-Specific Findings and Commercial Opportunities

The analysis of these case studies confirms that the TES market is experiencing rapid commercialization by targeting distinct, high-value verticals. Each company’s success is rooted in its ability to offer a tailored solution that solves a specific problem that is not being adequately addressed by dominant energy storage technologies like lithium-ion batteries.

• For the Utility Sector: The primary opportunity lies in long-duration storage and the optimization of grid assets. Siemens Gamesa’s ETES is a compelling example of a solution that can compete with pumped hydro or compressed air storage by providing GWh-scale capacity without the same geological constraints. The ability to give a “second life” to existing power plants is a unique value proposition that will have a profound market impact.
• For the Industrial Sector: The main driver is decarbonization and operational resilience. EnergyNest’s success with YARA and Avery Dennison demonstrates that companies are willing to invest in technologies that offer a clear path to reducing emissions and securing long-term operational stability, regardless of the immediate financial return on energy arbitrage.
• For the Commercial Sector: The opportunity is in distributed energy and energy as a service. Axiom Cloud’s model shows that the most scalable and profitable business models may not require new hardware. By aggregating thousands of small-scale thermal storage systems and optimizing them with AI, the company has created a new class of distributed energy resource that can generate revenue from demand response and significantly reduce operational costs for its customers.

Key Challenges and Strategic Recommendations

While the momentum in the TES market is strong, significant challenges remain. The transition from a pilot or demonstration project to widespread commercial deployment is a complex and capital-intensive process. Companies like Siemens Gamesa, despite a successful pilot, still face the hurdle of scaling their technology to the GWh capacity required for major grid applications. Similarly, the regulatory landscape, while generally supportive, needs to continue evolving. Clear market designs are required to properly reward the flexibility and long-duration capabilities that TES offers, and a level playing field needs to be created to prevent “double charging” of taxes or grid fees that can undermine the business case for these solutions.

To address these challenges, the following recommendations are suggested:

• Policymakers should accelerate the revision of regulatory frameworks to ensure that the unique benefits of long-duration and thermal storage are appropriately valued in energy markets, which would help attract long-term investment.
• Companies should continue to focus on creating diverse, vertically-specific solutions rather than attempting to compete directly with lithium-ion batteries across all applications. The case studies in this report demonstrate that a specialized, sector-focused approach is key to achieving commercial success.
• The integration of software and AI, as exemplified by Axiom Cloud, should be a strategic priority for all thermal storage companies. This approach not only optimizes the performance of the hardware but also unlocks additional revenue streams through valuable grid services, creating a more resilient and scalable business model.

Future Market Trajectory

The market for thermal energy storage in 2025 is defined by a rapid move beyond research and development and into a phase of diverse, commercially-validated applications. The future trajectory of this sector will depend on the continued alignment of technology, policy, and business models. Success will be measured not just by technical efficiency but by the ability to offer solutions that address the specific, high-value needs of different market segments, from utilities to industrial clients and commercial retailers. As the global push for a decarbonized and resilient energy system continues, thermal energy storage, in its many forms, is positioned to become a critical and integral part of the future energy landscape.