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Thermal Energy Storage System Market

The market for Thermal Energy Storage System was estimated at $6.0 billion in 2025; it is anticipated to increase to $9.2 billion by 2030, with projections indicating growth to around $14.0 billion by 2035.

Report ID:DS2407002
Author:Chandra Mohan - Sr. Industry Consultant
Published Date:
Datatree
Energy & Power
Energy Storage
Thermal Energy Storage System
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Report Summary
Market Data
Methodology
Table of Contents

Global Thermal Energy Storage System Market Outlook

Revenue, 2025

$6.0B

Forecast, 2035

$14.0B

CAGR, 2026 - 2035

8.9%

The Thermal Energy Storage System industry revenue is expected to be around $6.0 billion in 2026 and expected to showcase growth with 8.9% CAGR between 2026 and 2035. Building on this trajectory, the Thermal Energy Storage System market has evolved into a critical enabler of the global energy transition, underpinning grid flexibility, peak-load management, and long-duration renewable integration across utility and industrial sectors. As part of the broader thermal energy storage market, Power Generation and District Heating & Cooling together account for 68.8% of total demand, underscoring the system’s pivotal role in decarbonizing electricity supply and large-scale thermal networks. Policy-driven decarbonization, rising penetration of variable renewable energy, and growing emphasis on energy efficiency in buildings and industry are intensifying the need for cost-effective, dispatchable thermal energy solutions. Concurrently, increasing investments in district heating and cooling infrastructure, combined with wider deployment of storage-enabled combined heat and power and concentrated solar power assets, are reinforcing the long-term commercial and strategic relevance of Thermal Energy Storage Systems worldwide.

The Thermal Energy Storage System is designed to capture, store, and release thermal energy using technologies such as sensible heat storage, latent heat storage, and molten salt thermal storage, enabling optimized energy use and improved system reliability. Core features include high round-trip efficiency, scalability from building-level installations to utility-scale plants, and compatibility with diverse heat sources ranging from solar collectors and electric boilers to industrial waste-heat streams. Major applications encompass power generation, district heating and cooling networks, industrial process heating, and building energy management, with sensible heat storage technology alone generating approximately $4.68 billion in revenue in 2025. Recent trends driving demand include the integration of Thermal Energy Storage Systems with smart grids and digital control platforms, increasing adoption in concentrated solar power plants, and the development of advanced storage materials that enhance performance, extend storage duration, and lower lifecycle costs across the thermal energy storage market.

Thermal Energy Storage System market outlook with forecast trends, drivers, opportunities, supply chain, and competition 2025-2035
Thermal Energy Storage System Market Outlook

Market Key Insights

  • The Thermal Energy Storage System market is projected to grow from $6.0 billion in 2025 to $14.0 billion in 2035. This represents a CAGR of 8.9%, reflecting rising demand across Process Heating & Cooling, District Heating & Cooling, and Power Generation.

  • Aalborg CSP, CALMAC, and EVAPCO are among the leading players in this market, shaping its competitive landscape.

  • U.S. and Germany are the top markets within the Thermal Energy Storage System market and are expected to observe the growth CAGR of 6.5% to 9.3% between 2025 and 2030.

  • Emerging markets including India, Brazil and South Africa are expected to observe highest growth with CAGR ranging between 8.5% to 11.1%.

  • Transition like Transition to Advanced Materials is expected to add $812 million to the Thermal Energy Storage System market growth by 2030.

  • The Thermal Energy Storage System market is set to add $8.0 billion between 2025 and 2035, with manufacturer targeting District Heating & Cooling & Power Generation Application projected to gain a larger market share.

  • With

    renewable energy integration and industrial decarbonization accelerating thermal energy storage demand, and

    Advanced storage materials and system design innovations improving thermal energy storage performance, Thermal Energy Storage System market to expand 135% between 2025 and 2035.

thermal energy storage system market size with pie charts of major and emerging country share, CAGR, trends for 2025 and 2032
Thermal Energy Storage System - Country Share Analysis

Opportunities in the Thermal Energy Storage System

India’s ambitious renewable targets are creating a niche for grid-scale Thermal Energy Storage System installations coupled with solar thermal and emerging concentrated solar power plants. Latent heat storage is also positioned to grow fastest in this segment, within a global market expected to rise from $0.87 billion in 2025 to $1.49 billion by 2030 at roughly 11.3% CAGR. Utility-scale projects in arid states seek reliable renewable integration, evening peak support, and improved capacity factors through high-density phase-change materials.

Growth Opportunities in Europe and Asia-Pacific

In Europe, the Thermal Energy Storage System market is increasingly shaped by stringent decarbonisation policies and building-efficiency regulations, with District Heating & Cooling emerging as the most relevant application due to extensive urban networks and rapid heat-pump deployment. Top opportunities centre on integrating thermal storage technologies into large-scale district systems and campus microgrids, where sensible heat storage and latent heat storage can deliver seasonal balancing and peak-load shaving for utilities and municipalities. Competition is intensifying among established boiler and chiller manufacturers, district-heat operators, and engineering contractors that are bundling advanced heat storage systems with smart controls and digital optimisation platforms. Key regional drivers include carbon pricing, electrification of heat, and incentives for renewable energy integration, favouring product positioning around modular, utility-scale energy storage solutions that enhance grid flexibility and resilience for heating-dominated markets.
In Asia-Pacific, the Thermal Energy Storage System landscape is led by Process Heating & Cooling applications, which hold the highest relevance as energy-intensive industries seek cost-effective decarbonisation and greater operational reliability. Top opportunities lie in retrofitting industrial clusters, data centres, and commercial complexes with thermal storage technologies that shift cooling and process-heat loads off-peak, alongside power generation projects in sunbelt countries where molten salt storage in solar thermal plants is gaining traction. Competitive dynamics are driven by local industrial equipment manufacturers, regional EPC companies, and emerging technology firms that customise heat storage systems to country-specific regulations, energy prices, and climatic conditions. Major drivers include rapid industrialisation, energy security concerns, and growing support for renewable energy integration, creating strong investment potential for modular, high-temperature energy storage solutions that improve grid flexibility and reduce fuel dependence across diverse industrial and utility sectors.

Market Dynamics and Supply Chain

01

Driver: Renewable energy integration and industrial decarbonization accelerating thermal energy storage demand

Thermal energy storage adoption is also accelerating due to renewable energy integration and industrial decarbonization initiatives. Rapid solar and wind deployment increases intermittency, creating demand for storage technologies that can also shift heat availability across hours or seasons. Sensible and latent heat storage systems allow excess renewable electricity or heat to be captured and reused, improving grid flexibility and reducing curtailment. Parallel to this, energy intensive industries face pressure to cut emissions without disrupting operations. Process heating, district energy, and combined heat and power plants increasingly deploy high temperature storage to recover waste heat and reduce fossil fuel reliance. also advances in phase change materials, molten salts, and insulated storage media improve efficiency, cycling stability, and operating temperature ranges. Together, renewable penetration and decarbonization targets create sustained, structurally driven demand for thermal energy storage across power generation, industrial processes, and large scale energy networks globally across emerging and mature energy markets worldwide today.
Thermal energy storage growth is also strongly supported by advancements in storage materials and system design. Research into high performance phase change materials enables higher energy density and more precise temperature control, supporting applications from industrial heat to district cooling. Improved molten salt formulations expand operating temperature windows while reducing corrosion and degradation risks, extending system lifetimes. At the system level, modular tank designs, improved insulation, and advanced thermal management software enhance efficiency and lower installation complexity. Digital monitoring and predictive controls optimize charge discharge cycles and integrate storage with smart grids and industrial automation platforms. These technology driven improvements reduce levelized storage costs, increase reliability, and open new use cases where conventional batteries or fuel based systems are also less economical or technically suitable for large scale thermal energy applications globally.
02

Restraint: High upfront capital costs and complex integration limit thermal energy storage adoption

One of the most significant restraints on the thermal energy storage market is the high initial investment required for system installation and infrastructure. Advanced TES technologies such as molten salt storage or phase change material systems involve expensive materials, specialized engineering, and custom design features, which can push project costs into the millions, deterring smaller developers and end-users from committing capital. These steep upfront costs lengthen payback periods and can reduce demand in cost-sensitive segments such as smaller commercial or industrial installations. Additionally, integrating TES with existing facilities often requires bespoke engineering and can introduce technical barriers that increase project timelines and revenue uncertainty. This combination of high capital expenditure and integration complexity suppresses broader market penetration and slows revenue growth in emerging regions where financial and technical resources are limited.
03

Opportunity: District heating modernization in cold-climate European urban residential zones and Industrial waste-heat recovery for petrochemical clusters across Middle East

Rapid decarbonization in Europe’s cold-climate cities is accelerating demand for district heating networks supported by Thermal Energy Storage System solutions. Untapped secondary and smaller municipalities require retrofittable sensible heat storage integrated into existing boilers and central plants. Globally, sensible heat storage revenues are projected to rise from $4.68 billion in 2025 to $6.66 billion by 2030 at a 7.3% CAGR, and European residential networks are expected to drive above-average growth by prioritizing grid flexibility and reliable winter peak load management.
Middle Eastern petrochemical and refining clusters are beginning to adopt Thermal Energy Storage System technology to capture high-temperature industrial waste heat that is currently vented. The most attractive upside lies in thermochemical storage, which globally is forecast to expand from $0.42 billion in 2025 to $1.01 billion by 2030, delivering about 18.87% CAGR. Industrial decarbonization policies, new refinery complexes, and strategic alliances between process licensors and storage integrators will underpin regional leadership in long-duration, modular thermal storage projects.
04

Challenge: Technical and regulatory challenges create barriers and slow market expansion

Thermal energy storage deployment is also restrained by ongoing technical limitations and inconsistent regulatory frameworks that shape market dynamics. On the technical side, efficiency losses during charge-discharge cycles and the degradation of storage media over time can reduce long-term performance, making stakeholders cautious about investment returns and raising operational costs. From a regulatory perspective, many regions lack standardized codes, permitting processes, and clear policies for thermal storage integration, creating uncertainty and delaying projects. This regulatory fragmentation increases compliance costs and can discourage utility and industrial players from prioritizing TES over more established energy storage alternatives. Together, these technical and policy challenges temper demand growth and constrain revenue opportunities, particularly where regulatory support for novel storage technologies is limited.

Supply Chain Landscape

1

TES Components

CALMACEVAPCO
2

System Manufacturing

Brenmiller EnergyHyme Energy
3

Project Integration

Aalborg CSP Thermal Energy Storage SystemBrenmiller Energy
4

End-Use Applications

Concentrated solar power plantsDistrict heating and cooling
Thermal Energy Storage System - Supply Chain

Use Cases of Thermal Energy Storage System in Process Heating & Cooling & District Heating & Cooling

Process Heating & Cooling : Process Heating & Cooling in industrial settings uses thermal energy storage to capture excess or waste heat and reuse it to meet fluctuating thermal demands, improving energy efficiency and reducing fuel consumption. The most common TES technologies here are sensible heat systems such as packed beds, molten salt tanks, or hot water storage that store heat at elevated temperatures and release it as needed for manufacturing, pre-heating, or steam generation, helping stabilize process temperatures. These systems enable industries to shift energy use to off-peak periods, lower operational costs, and enhance sustainability by making better use of surplus heat that would otherwise be lost.
District Heating & Cooling : District Heating & Cooling networks rely on thermal energy storage to balance supply and demand across cities or campuses by storing heat or chilled energy during periods of low demand for later use. The most widely deployed TES in this sector is sensible heat storage using large hot water tanks, chilled water systems, or seasonal pit and aquifer storage, which smooth out thermal loads and allow integration of renewable heat sources. These systems reduce peak generation needs, cut energy costs, and support sustainability by enabling centralized facilities to operate more efficiently and reliably throughout varying daily and seasonal demand cycles.
Power Generation : In Power Generation, thermal energy storage enhances dispatchability and integrates intermittent renewable sources by storing heat for electricity production when needed. Molten salt storage is the dominant technology in concentrated solar power plants, capturing high-temperature heat during sunny periods and releasing it to produce steam and electricity even without sunlight, which improves grid stability and capacity utilization. Sensible heat storage using hot water or rock media also supports load shifting and peak shaving in conventional plants. These TES systems enable greater renewable integration, optimize plant efficiency, and reduce reliance on fossil-fuel backup generation by decoupling heat collection from power output timing.

Recent Developments

Recent developments in the thermal energy storage system market show a strong shift toward renewable integration and grid flexibility, driven by rising demand for energy efficiency and decarbonization solutions. Growth in sensible heat storage and latent heat systems with phase change materials enhances capacity for industrial heating, district cooling, and power generation. A key trend is coupling TES with smart grid technologies to optimize peak load management and leverage seasonal thermal storage. This strategic shift boosts operational resilience and aligns storage deployment with clean energy targets.

September 2025 : Aalborg CSP and Alfa Laval launched a dedicated header-and-coil heat exchanger product for large-scale thermal energy storage systems, strengthening their collaboration through the joint venture Alfa Laval Aalborg Header-coil A/S to support industrial-scale molten salt TES deployments. This product enhances heat transfer efficiency and reliability in TES applications.
March 2025 : Hyme Energy partnered with Sulzer Management Ltd to jointly advance industrial molten hydroxide thermal energy storage technology following operations at the world’s first molten salt plant, enhancing system integration capabilities and supply chain development for broader industrial heat decarbonization.

Impact of Industry Transitions on the Thermal Energy Storage System Market

As a core segment of the Energy Storage industry, the Thermal Energy Storage System market develops in line with broader industry shifts. Over recent years, transitions such as Transition to Advanced Materials and Integration with Smart Grids have redefined priorities across the Energy Storage sector, influencing how the Thermal Energy Storage System market evolves in terms of demand, applications and competitive dynamics. These transitions highlight the structural changes shaping long-term growth opportunities.
01

Transition to Advanced Materials

The accelerated transition to advanced materials, particularly high-performance phase change materials, is emerging as a decisive growth catalyst for the global Thermal Energy Storage System market, projected to contribute an incremental $812 million to market expansion by 2030. By enabling higher energy density, superior latent heat storage, and improved thermal stability, these materials enhance overall energy efficiency and system reliability across applications such as concentrated solar power, district heating, and industrial waste heat recovery. This shift supports cost optimization through reduced footprint, lower operating costs, and longer asset lifetimes, strengthening the business case for thermal energy storage solutions. Consequently, suppliers that rapidly industrialize advanced materials technologies will gain a competitive edge as thermal energy storage systems become increasingly critical for renewable energy integration, grid flexibility, and long-term decarbonization strategies.
02

Integration with Smart Grids

Integration with smart grids is becoming a pivotal transition in the thermal energy storage system market, reshaping how heat and electricity are managed across energy networks. By linking TESS with smart grid platforms, utilities can dynamically charge and discharge thermal storage based on real-time demand, electricity prices, and renewable generation availability. For example, excess solar or wind power can be converted into stored thermal energy during low-demand periods and later used for district heating, cooling, or industrial process heat. This transition improves grid flexibility, reduces peak load stress, and lowers reliance on fossil-fuel backup systems. In manufacturing and district energy sectors, smart grid integration enables predictive energy management, helping operators cut operating costs, improve asset utilization, and support decarbonization targets while maintaining reliable energy supply.