A Smarter Path to Decarbonised Thermal Energy

Overview

As organisations accelerate the electrification of industrial heat and cooling, electric thermal energy storage (eTES) is emerging as a powerful enabler of cost-effective decarbonisation, particularly when integrated with renewable energy power purchase agreements (PPAs). By converting low-carbon electricity into stored thermal energy when renewable generation is abundant, eTES systems allow businesses to decouple thermal energy production from real-time power supply, unlocking both economic and sustainability benefits.

At its core, the rationale for integration is simple: use low-cost, renewable electricity to generate and store thermal energy when it is available, then dispatch the thermal energy when it is operationally required. Doing this well, however, depends on four interconnected design pillars: renewable energy sourcing strategy, PPA structure, dispatch and control, and sustainability reporting.

Renewable Energy Source

A key early decision is whether renewable energy supply is sourced on-site, off-site or a combination of both. On-site renewables offer strong controllability and can reduce network costs while supporting broader site electrification. They also deliver direct scope 2 emissions reductions by lowering grid electricity consumption. However, on-site generation is often constrained by space and scalability, limiting its ability to fully meet the additional load created by an eTES system. Off-site renewables, by contrast, are highly scalable and can be sized to match the thermal energy demand. They, however, introduce market, volume and basis risks that must be actively managed.

PPA Structure & Contracting

How these trade-offs translate into cost and risk exposure ultimately depends on the way renewable supply is contracted. On-site generation can be procured through physical PPAs that avoid upfront capital investment and may be linked to either electricity or steam output. Off-site PPAs include virtual or retail PPAs, which in this application would generally be non-firm, meaning a degree of exposure to spot prices. Importantly, the inherent flexibility of thermal storage can turn this exposure into an advantage, enabling charging during low-price periods and reducing overall energy costs.

Dispatch & Control Strategy

Realising this value in practice requires active dispatch and control of the eTES system. eTES charging can be optimised against renewable generation availability and wholesale spot prices, depending on whether organisations prioritise lowest-cost outcomes or alignment with 24/7 clean energy objectives. These strategies must be balanced against physical constraints such as thermal demand, storage depth and ramp rates to ensure reliability.

Sustainability Reporting Considerations

Finally, thermal energy storage and renewable energy sourcing integration have growing implications for sustainability reporting.  As standards increasingly favour hourly matching, flexible eTES systems integrated with PPAs are well positioned to support credible 24/7 renewables claims—bridging the gap between decarbonisation ambition and operational reality.

Want to learn more? Register for the Business Renewables Centres and A2EP Webinar or get in touch with Ben Spencer & Roy Ghandi to explore how thermal energy storage linked with renewable electricity sourcing can reduce costs and GHG emissions for your company.