Thermal storage lacks a 'celebrity evangelist'
Thermal storage, in which energy is stored as either heat or cold, is losing out to battery storage because it doesn't have a high-profile backer of the likes of Elon Musk and doesn't charge sexy sports cars, said ICE Energy CEO Mike Hopkins. The technology has been proven in the field and should overtake batteries because it better suited to large loads over longer periods of time, he said. A housing development in Canada is testing a system to store thermal energy underground in the summer to be released during the freezing Alberta winters. Companies such as Ice Energy and Calmac use power to precool an insulated vat of liquid that reduces peak load.
A vital technology for securing deep greenhouse gas reductions exists and works well, but still hasn't achieved widespread deployment.

Thermal energy storage has succeeded in the field for decades. Precooling an insulated vat of liquid can chop an electricity bill and reduce peak load, as companies like Calmac and Ice Energy have shown. An experimental housing development in Canada uses underground thermal energy storage, powered by solar energy in the summer, to cover its heating needs through the frigid Alberta winters.

Such products address a decarbonization challenge that cleaner grid power alone cannot touch. Buildings consume 70 percent of the electricity produced in the U.S., and emit 40 percent of the nation's carbon emissions. Any holistic attempt to tackle climate change must confront building-sector energy use.

Stanford professor Mark Jacobson, for instance, utilizes underground thermal storage as a pillar of his roadmap to decarbonize the whole U.S. energy system, because it reduces overall electrical demand and gas consumption for heating. When a bevy of academics critiqued that study this summer, they specifically called out the reliance on this rarely implemented tool. How can you save the world, the argument goes, with a technology whose real-world use is confined to an obscure housing pilot in Alberta?

Battery energy storage runs into obstacles related to its technological novelty. It's hard to get financiers to back a battery chemistry that hasn't seen much run time and is sold by a startup with a limited balance sheet. Despite that, the sector is booming -- GTM Research predicts a 22-fold increase in U.S. megawatt-hours deployed form 2016 to 2022.

Meanwhile, for thermal energy storage, questions of technological effectiveness are largely settled, but the segment hasn't scratched the surface of its potential impact. Indeed, that potential scarcely registers outside of a handful of companies that have staked their futures on it, and articulate the vision with a near-messianic zeal.

"I expect thermal will be bigger than batteries," said Ice Energy CEO Mike Hopkins, "because thermal loads are the large loads. They are the problematic loads; they are the loads that don't lend themselves to using electrical storage."

Much has been written about the rise of batteries. Less attention has gone to the thermal storage contingent, but they have their own strategies for growth. Their success could not only help utilities in their quest to subdue duck curves and steadily creeping peaks, but also play a central role in reducing carbon emissions from buildings worldwide.

The technology

The basic premise of thermal storage is to convert surplus electrical energy into heat or cold that can be used later.

That process takes on gridwide significance in light of the growth in peak demand, which utilities across the country attribute to their customers' simultaneous evening air conditioning usage.

Battery storage can serve that demand, but it suffers round-trip inefficiency losses; that's throwing away energy. The materials to store energy thermally cost less than lithium-ion chemistries do and theoretically last longer. The core technology is water in a plastic tank.

Plus, if you freeze that block of ice at night when both the ambient temperature and the cost of electricity fall, it takes less energy and money than doing so in the middle of a sunny, hot afternoon.

"The notion that you would store energy in the form of batteries for air conditioners is a really inherently bad idea," Hopkins said. "What you really want to do is get these thermal loads operating more efficiently. Make cooling when it's a good time to make cooling."

Ice Energy integrates its technology into air conditioning systems, to use unwanted noonday solar power or cheap nighttime electricity to precool a home before the evening peak. When electricity supply costs more or a utility is struggling to meet demand, the Ice Bear uses that block of ice to chill the building, instead of consuming electricity.

Whereas Ice Energy serves the commercial and residential markets, mostly in California, Calmac applies similar technology for massive skyscrapers and university campuses. Since the 1980s, the New Jersey company has racked up more than 4,000 customers in 60 countries.

Calmac's IceBank in action: It's a bunch of tanks storing cold liquid. (Image credit: Calmac)

Axiom Exergy applies the concept to grocery stores, reducing the utility bill for keeping food cool, and building in several hours' worth of backup cooling to carry through short outages.

Hot thermal storage functions much the same way as the cold stuff: Use excess power to heat up a liquid, then pipe it down to an insulated holding tank until it's needed to heat the building.

The Drake Landing Solar Community, in Alberta, Canada, uses underground district heating to store solar energy from the summertime. In the 2015-2016 winter season, the community supplied all of its heating needs from stored thermal energy; it supplied more than 90 percent of heating needs this way over each of the last five winters.

In a rarer variation, the technology allows the stored thermal energy to convert back into electricity. That's what Google's X lab is trying to do with a project dubbed Malta. It would use electricity to both heat up molten salts and cool tanks of liquid; when needed, the process reverses, using the unleashed hot and cold air to spin a turbine and regenerate electricity.

Crucially, thermal storage evades the toxicity and flammability concerns that come with high-powered lithium-ion batteries.

"Heating up water or making ice aren’t things that anyone’s going to be worried about," said Brett Simon, an energy storage analyst at GTM Research. "These systems aren’t using any reactive or potentially hazardous or flammable chemicals. That could lead people who are more cautious about battery storage to home thermal storage."

Obstacles to growth

Thermal storage has been around longer than advanced battery storage, but it has never broken out of a niche segment. Only a handful of companies install this in the U.S., compared to the dozens now chasing the battery storage market.

Cultural predilections play a role here, Ice Energy's Hopkins said. Battery storage only became popular in the last few years, in large part thanks to Elon Musk's knack for capturing the public imagination. That newfound awareness could be transferable.

"Because they know about lithium, when you talk about other forms of storage, it's not so foreign," he said.

Thermal storage, though, lacks a celebrity evangelist, and it can't charge a sexy sports car.

"The thing about thermal storage is it's invisible to the occupants," said Calmac CEO Mark MacCracken. "The people who go into these commercial buildings expect the building to be cool. They have zero understanding of how it's being cooled."

Companies seeking to displace conventional heating and cooling have to reach customers when they need that equipment, because it's not an everyday purchase.

New-build homes could be a promising market, but for existing homes, the time to buy a new AC unit typically comes as soon as the old one breaks. At that point, the customer has strong incentive to go with what's fastest and easiest, which probably isn't a wonky cooling technology they've never heard of.

Setting aside the consumer awareness challenge, there are technical limitations to be conquered.

One is getting into the design workflow for major building projects. Typically, MacCracken said, the architect designs a building and asks the engineers to cool it. They look at the peak cooling power needed to cover the hottest day of the year, add a margin for safety and call it a day.

Thermal storage requires a different kind of analysis and carries a perception of risk, even if it ultimately costs the same and delivers the same safety factor, MacCracken said. It takes time to break into that industrial workflow on a broader scale.

Even then, the proliferation of thermal storage depends on an economic tradeoff between business-as-usual and shifting demand away from peaks. That implicates rate design, which has proven itself to be an unreliable partner in pitching a product.

"The number-one problem is uncertainty with the tariffs, with the difference between the daytime and nighttime costs," said Mary Ann Piette, director of the Building Technology and Urban System Division at the Lawrence Berkeley National Lab. "The tariffs change a lot over time, and there’s not enough certainty on the economics."

Nationwide, time-differentiated electricity rates and demand response programs are gaining in numbers as utilities unpack the possibilities of distributed energy resources. Until those arrive, the benefits of thermal storage to consumers will remain largely theoretical, even if they're already tangible for the grid.

Geography matters

Climate helps determine the effectiveness of thermal storage, more so than it does for batteries.

The ideal market has a big diurnal swing, with a hot afternoon and a cooler night, Piette said. Desert environs like Arizona and inland California fit nicely.

In temperate Berkeley or the coastal Pacific Northwest, few homes have or need air conditioning. A residential Ice Cub would be of little use, whereas a battery would still be able to displace electrical load and provide backup power in an outage.

Similarly, underground thermal storage works brilliantly in frigid Alberta, but less so in a place that stays pretty warm through the winter. That technology also requires a high level of community buy-in: The systems work best when they serve a whole neighborhood or campus.

That sort of cooperation is hard to achieve short of greenfield housing developments; ripping up the streets to dig under existing developments is a harder sell. District heating has fared well in cold, northern communities with dense populations and a politics of social cooperation -- Scandinavia, basically. Having a master utility for gas, power and steam helps.

"Owning and operating models [for district heating] are not that common in our urban areas," Piette said. "It is possible to do these things, and I hope over time we can create new business models."

Density and diversity of loads make the proposition more attractive, she added, referencing an Amazon office in Seattle that buys waste heat expelled by a nearby data center.

Partner to move forward

The thermal storage startups I spoke with were clear on one thing: They need to partner with larger entities to scale.

Ice Energy found allies in utility Southern California Edison and independent power provider NRG. SCE awarded a contract for 26 megawatt-hours of distributed, customer-sited thermal storage. That provided the security of revenue needed to start ramping up production. It just left the problem of cashflow.

The 22-person startup couldn't front the cost of all those Ice Bears and wait 20 years to get paid back. Instead, Ice Energy sold the special-purpose vehicle for the project to NRG, which has a massive balance sheet. NRG technically owns the future returns of the fleet, and pays Ice Energy upfront to install the equipment.

If all goes according to plan, NRG pockets an easy return on investment with minimal risk: the revenue is contracted through a major utility with a sterling credit rating. It's up to Ice Energy to find businesses willing to host a total of 1,800 Ice Bears for free, enjoying $1,000 to $1,500 in electricity bill savings per year per unit (Ice Energy has deployed a total of 1,200 units since its inception).

The company also has contracts with two utilities in Massachusetts, and another 400 megawatts in various stages of negotiation, Hopkins said.

The residential Ice Cub, which replaces a conventional air conditioning unit while adding thermal storage capabilities, started shipping this summer. Hopkins hopes to scale that product through a distribution deal with a major solar installer.

"Right now, for us, 1,800 seems like a big number," he said. "With the home market, you might see tens of thousands in the U.S. getting deployed."

That home-cooling market should not be underestimated, particularly if thermal storage competes on price but adds more services, said GTM's Simon.

"If they get 1 percent of the home AC market, that's already going to be much larger than annual home battery sales," he noted.

Axiom Exergy is also looking to bigger entities to move its product. In this case: national grocery store chains. The company is developing multi-store rollouts with Whole Foods and Walmart to follow on initial demo installations.

"I don't see any roadblocks in the foreseeable future because there are so many grocery stores and cold storage facilities out there," said Sales Director John Lerch. "There's always going to be...this need to keep food chilled in order to distribute it everywhere."

Calmac, which graduated out of the startup phase a few decades ago, is discussing utility partnerships but doesn't have any yet. The company is also reaching out to a different kind of partner: battery storage companies.

The pitch is to offer a hybrid product for commercial customers, with thermal storage sized to thermal load and batteries to handle the leftover peak demand. That could achieve savings at a lower per-kilowatt-hour rate than if batteries had to shoulder the heating and cooling load.

Thermal storage complements a smarter grid than the one we have today. It will be hard to sell as long as a customer pays the same for a kilowatt-hour at grid-wide peak as at 3 a.m. But as customers become more grid-literate, and utilities start to send more sophisticated price signals to a range of distributed energy assets, demand for thermal storage technology could finally start to warm up.