Thermal energy storage uses cheap, clean electricity to bring rocks, bricks, or molten metals to red-hot temperatures, then taps that heat later to do all sorts of work. The technology is relatively simple and could be deployed now to solve two big energy transition challenges: First, it could replace fossil-fueled heating for a wide range of hard-to-decarbonize industries. Second, it could soak up wind and solar power being generated when the grid doesn’t need it and store that power for when it does, enabling round-the-clock renewables.
But the dozens of companies making various forms of thermal energy storage today must clear a couple of key hurdles for the technology to make progress in cutting industrial carbon emissions. The first one? Proving they can scale up their projects enough to cost-effectively and reliably replace all the different kinds of dirty industrial heat.
Rondo Energy is starting to clear this hurdle. In the past few months, the San Francisco Bay Area–based startup has won deals at a half dozen industrial sites in the U.S. and Europe, ranging from food and beverage processing plants to chemicals and cement production facilities.
In the U.S., Rondo’s “heat batteries” — refractory brick blocks that can reach up to 1,500 degrees Celsius — started supplying heat to an ethanol plant in California last year. Under projects announced this year, the batteries are set to be installed in distilleries in Illinois and Kentucky owned by international spirits manufacturer Diageo and at a plastics recycling facility being built in Texas by chemicals giant Eastman — projects that are backed by U.S. Department of Energy grants now being negotiated by the companies involved.
And in Europe, Rondo last month won a commitment of 75 million euros ($80.6 million) from Breakthrough Energy Catalyst, the Bill Gates–founded investment group and an early Rondo backer, along with the European Commission and the European Investment Bank. The funding will support projects at a chemicals plant in Germany owned by Covestro; at GreenLab, a green industrial park in Denmark; and at an undisclosed food-and-beverage processing facility.
The new projects come on the heels of a $60 million investment round last year that included Breakthrough Energy Catalyst and Energy Impact Partners, as well as “a whole host of industrial groups wanting to use Rondo for their particular application, from mining and minerals to textiles and cement,” CEO Eric Trusiewicz told Canary Media in a July interview.
Among those strategic investors are mining giant Rio Tinto; the venture arm of global chemicals manufacturer SABIC; energy-efficiency-project investor SDCL Energy Efficiency Income Trust; and Siam Cement Group, a major cement manufacturer that also produces the refractory bricks used in Rondo’s heat batteries.
Still, government funding remains important to surmount what Trusiewicz described as the “funding gap” between pilot-scale and commercial-scale projects. The technology itself is well known — refractory brick similar to what Rondo relies on has been used to store heat in steel blast furnaces for more than a century. But technology is just one factor to consider when assessing risk.
“Venture capital investors are reluctant to get into the infrastructure finance” needed to build and operate projects, he said. Meanwhile, “infrastructure financiers are reluctant to move into things they haven’t yet seen” deployed at scale.
The funding Rondo is getting for its European projects will help solve the first problem with “two to three first-of-a-kind projects in a series of industries,” he said. That’s important, because industrial companies want to see successful implementations in facilities similar to their own before committing to costly and time-consuming retrofits.
So do Rondo’s prospective financial backers. Besides selling its heat batteries directly to customers, Rondo offers “heat-as-a-service agreements” in which it bears the cost of installing and operating its systems, then earns back those costs by selling clean industrial heat to its customers. Ensuring an adequate payback on those investments is a critical part of that equation.
Trusiewicz declined to reveal these financial details for its U.S. and European projects. He also declined to comment on a news article from Axios last month stating that Rondo is planning to raise a $100 million capital round. “We’re not really talking about fundraising” at the present time, he said. “But the company needs to raise substantial amounts of capitals, and will continue to do so.”
Getting the clean power to make thermal storage a climate solution
The long-term cost effectiveness of thermal energy storage depends on more than a well-planned and executed project, however. Financial backers of these projects will need proof that the carbon emissions reductions and energy cost savings ultimately outweigh the upfront costs — and that requires cheap and ample clean power.
“One of the things that companies have to think through as they’re switching fuels is, how do we get enough renewable or carbon-free electricity to meet the growing electricity requirements?” said Blaine Collison, executive director of the Renewable Thermal Collaborative, a global coalition of companies and organizations working to decarbonize industrial heating and cooling.
To be clear, solar and wind power is already cheaper than electricity from newly built fossil-fueled power plants in the U.S. and Europe. But those lower production costs don’t always translate to lower energy prices for industrial customers, unless those customers are able to procure their own renewables supplies or work with utilities to secure favorable rates for the clean energy they buy.
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