Rondo’s heat batteries will soon be cleaning up factories in US, Europe

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 Ventures 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. 

“Our members are working on their own renewable electricity procurements,” Collison said. ​“How and whether thermal storage pencils as an opportunity depends hugely on whether a customer has access to deregulated electricity markets, wholesale pricing, modern industrial rates — and the ability to get renewables on supply schedules with how thermal storage works.” 

Why heat batteries and surplus clean energy go so well together

But as the proportion of wind and solar power on the grid rises, thermal energy storage comes into its own, said John O’Donnell, Rondo’s founding CEO, who now serves as chief innovation officer. 

In some parts of the world, clean energy is already being generated in excess of demand for electricity, driving wholesale power prices below zero dollars a megawatt-hour and forcing renewable projects to curtail output, he noted. That’s the case for solar power in California and Australia during mild and sunny days, and in Denmark and West Texas during windy nights. 

At those moments, energy storage shifts from having to pay for the power it’s absorbing to potentially being paid for the service of storing it, he said. That, combined with the cost and carbon savings that come from not needing to buy and burn fossil fuels anymore, can add up quickly. 

“What’s the price of burning fuel, plus carbon emissions? That is very variable,” O’Donnell told Canary Media in a March interview. In Europe, where the price of fossil gas is much higher than in the United States, and where industrial companies bear the cost of carbon emissions under emissions trading systems, ​“it is two or three times what it is in the United States.” 

These are the kind of economics driving Portuguese clean energy developer EDP to finance up to 2 gigawatt-hours of Rondo’s heat batteries for commercial and industrial customers in conjunction with building up to 400 megawatts of new wind and solar projects, he noted. ​“That’s because the numbers work there now.” 

Nor is the output of Rondo’s systems confined to providing industrial heat, although that’s the use case for most of its deployments to date. In Germany and the U.S., Rondo’s batteries are being harnessed to generate high-pressure steam for direct use in industrial processes.

In addition, the batteries can supply heat directly into cement production, which is one of the more complicated industries to decarbonize. In March, Rondo announced a plan with investor and refractory brick supplier Siam Cement Group to build a pilot project in Thailand to test its heat batteries as a tool to decarbonize.

But Rondo’s technology can also be used to generate electricity, O’Donnell noted. The company’s project with the Danish clean industrial hub GreenLab will power a combined heat and power (CHP) system that uses steam to drive a power-generating turbine and captures the lower-temperature steam remaining for other industrial processes. CHP systems provide a significant portion of the steam used in the U.S. today, whether for industrial purposes or for ​“district energy” systems that heat and cool city centers and college and corporate campuses, and the vast majority of it is generated with fossil fuels, he said. 

Energy storage built from bricks and electric heating elements is cheaper than the lithium-ion batteries that have become the primary energy storage resource for renewable-rich grids today, O’Donnell said. While Rondo doesn’t disclose financial details on the cost of its systems or the value of the energy they store, he estimated that they can provide energy storage ​“well within $20 a megawatt-hour,” about one-seventh the cost of lithium-ion battery packs, which are priced at about $140 per megawatt-hour, as reported by Bloomberg NEF in November. 

The pace at which these potential economic advantages can be put to use to absorb and balance renewable-rich grids will depend on how quickly and successfully Rondo and other thermal energy storage providers can move ​“from being seen as new to being seen as conventional,” O’Donnell said.

“We’ve been in commercial operation for a year. But the journey from first-of-a-kind-project capital to the same rates of return as building conventional renewables — that’s the journey we’re on.”