A new report by Energy Systems Catapult has concluded that thermal storage will be a key component of the UK’s energy system as it continues to decarbonise.
Innovating to net zero 2026: scaling flexibility to meet the five peaks challenge says thermal storage in homes and commercial buildings could increase from around 50GWh in 2024 to almost 200GWh, while thermal storage in heat networks could hit 300GWh.
It adds that flexible storage and power-on-demand dispatchable generation, such as nuclear power, would be necessary to make renewable generation the most cost-effective energy system in the UK.
Five gaps that need to be considered between electricity supply and demand have been identified by the report: peak power and peak energy gaps within a single day; peak daily and peak duration gaps over multiple days; and the peak heat gap during times of extreme cold weather.
It says most intra-day flexible requirements could be made up of static batteries and electric vehicle (EV) batteries, with Vehicle-to-Grid seen as having significant potential as the costs are not carried by the energy system.
The report states that no one flexible technology is most cost-effective in addressing all peak gaps. Smart energy appliances, such as heat pumps, have a potential role to play in managing intra-day flexibility, particularly if EVs do not deliver to their expected potential.
The peak heat gap during sustained periods of cold, calm winter weather creates up to an additional 2.5TWh per day of heating demand. This puts severe strain on an electrified energy system and presents probably the greatest unsolved challenge to the energy transition, says the report.
While thermal storage (such as hot-water tanks, phase-change materials and sand-based systems) is effective at managing daily fluctuations – bridging the intra-day peak energy and peak power gaps – it falls short for prolonged extreme cold.
The potential for data centres
The report says data centres are expected to add substantial new load to the energy system, presenting significant opportunities for flexibility. Innovations in load shifting, temporally and geographically, local heat stores and reuse of waste heat could all help manage peak gaps. It says data centres with their own gas-fired generation to overcome Grid constraints could be used as an alternative to replacing ageing gas-peaking plant.
A typical domestic hot-water tank can only store about a tenth of the energy required to heat a home on a cold day. Furthermore, thermal storage generally cycles daily and has little role in addressing multi-day duration gaps.
To cut this peak and manage the gap, the report says a combination of broader innovations is required:
- Large-scale energy efficiency: upgrading building fabrics and insulation to reduce overall heat demand by around 15-20%.
- Heat pump innovation: developing pumps and controls that maintain a higher coefficient of performance in very cold temperatures.
- Heat network expansion: significantly expanding district heat networks, which can incorporate large-scale thermal storage to provide up to 300GWh of flexibility by 2040.
- Industrial flexibility: using significant flexibility and load shifting from the commercial and industrial sectors.
If these fail to curtail electricity demand sufficiently during the peak heat gap, the energy system will have to rely on more difficult fallbacks. These include deploying up to an additional 50GW of peaking plant, retaining the gas grid to run fallback gas boilers in homes, or relying on behaviour change.
The report says energy efficiency remains an important way to reduce all the peak gaps. It calls for more innovation to develop insulation measures that are easier to install and less prone to poor quality. Existing technologies and approaches to measure in situ energy performance need to be integrated into policy and matched with attractive customer propositions.
Thermal storage
Thermal storage can be used to bridge the peak energy and peak power gaps in homes, particularly those connected to heat networks where large hot-water stores are practical.
While the report predicts almost 200GWh of fully connected smart thermal storage by 2040 (with 150GWh provided by commercial buildings), it notes that thermal storage today is mainly through hot-water tanks that are not smart, are limited by space, and are constrained in their ability to offer thermal storage for the system by their primary function to provide hot water. Alternatives such as phase‑change materials, thermochemical storage and the thermal mass of buildings could provide similar benefits, it says.
‘Base load’ heat sources, such as geothermal and ‘waste heat’ from processes including nuclear cogeneration, are of most value to the system when paired with thermal storage systems, says the report. They provide a continuous heat source that can be flexed depending on the wider pressure on the electricity system.
District heat networks can be a valuable and flexible asset on the system, helping to reduce strain on electricity networks, electricity storage and low-use electricity peaking assets.
The commercial sector has the potential to provide 8GW of electricity flexibility, as well as 150GWh of thermal storage. ‘Commercial flexibility can take the form of peak reduction (ie, moving processes such as smart charging of EV fleets to periods of lower demand) or using energy storage to shift energy consumption without changing processes and behaviour,’ the report says. The sector represents 19% of energy consumption and 30% of electricity consumption, and there is potential to provide high levels of flexibility. Barriers include uncertain payback periods and organisations focusing on their core business rather than flexibility.
The Innovate UK‑funded GridFlex programme found many factors influence commercial organisations’ decision to provide flexibility, including interaction between facility managers, building management system (BMS) providers, aggregators, suppliers and market operators. It highlights the BMS’s vital role in enabling smart participation in flexibility markets.
The report is available at bit.ly/4dzNp2O
