Batteries not the Only Route to Low-Carbon Heating

Christophe Williams is the CEO and Founder at Naked Energy, a British design and engineering business leading the global innovation in solar thermal and solar PVT, which delivers four times the carbon savings of conventional solar PV. Williams previously worked as a senior creative executive in the advertising industry for over fifteen years, gaining many awards from prestigious organisations such as ‘Creative Circle’ and ‘Clio’.

It’s a peculiarly British tradition to complain about the weather. In winter, it’s too dark and cold; in summer, we can’t move without sweating. But while we moan about the seasons, the National Grid is grappling with a far more serious problem: how to keep the lights on as our energy system shifts to renewables.

The challenge is becoming more acute. As solar and wind make up a greater share of the UK’s energy mix, the grid is increasingly exposed to the weather. In winter, when there can be little sun or wind, it struggles to meet demand, a condition known in Germany as dunkelflaute, or ‘dark doldrums’. 

In summer, we face the opposite, a glut of solar power that risks overwhelming a system designed for stable, centralised supply. The National Grid forecasts that power demand could drop to levels lower than those seen during the Covid-19 lockdowns, just as solar output peaks.

Rising costs, lead times, and demand

This volatility is exactly what long-duration energy storage is meant to solve. But the reality of deploying battery infrastructure is proving difficult. Earlier this year, former energy minister Lord Philip Hunt told Parliament that storage developers are waiting up to four years just for the high-voltage equipment needed to connect battery plants to the grid.

At the same time, geopolitical tensions are raising the cost of batteries. A 40.9% US tariff on Chinese battery imports is already pushing up global prices, set to rise to 58.4% by 2026.

The UK is also facing a surge in electricity demand from AI-driven data centres, electric vehicles, and heat pumps. The National Grid expects demand to increase by 50% by 2035.

We’re backing ourselves into a corner, chasing full electrification without a flexible system to support it. We won’t meet our climate targets relying on batteries alone. It will be too expensive, and too slow.

Another path is being forged, offering new opportunities to investors. Heating is responsible for about half of the UK’s final energy consumption and 37% of emissions, compared to electricity supply which is only responsible for 11.5%. The challenge is to move away from the gas-fuelled infrastructure embedded deeply in our heating systems. 

If we focus on decarbonising heat, particularly by using distributed, grid-independent technologies, we can reduce pressure on the grid while cutting emissions faster. These so-called ‘grid-edge’ technologies allow buildings to generate and manage their own heat locally, freeing up system-wide capacity.

A simple solution

One of the most compelling examples of this approach is underway in Finland. In the city of Vantaa, next to Helsinki, a new project is using three enormous underground caverns, each roughly 300 metres long and 20 metres wide, that will be filled with hot water and used to store thermal energy on a seasonal basis. Once completed, this facility will hold enough heat to warm the entire city of 250,000 people, the equivalent of Wolverhampton.

Instead of storing electricity, the project stores thermal energy - heated water generated by using excess summer solar energy and industrial waste heat. The water will be kept under pressure in rock caverns carved 100 metres below ground, allowing it to reach 140°C without boiling or evaporating. This heat will then be fed directly into the city’s closed-loop district heating system, where it circulates via heat exchangers, never mixing with the internal water systems of homes or businesses.

At first glance, this seems almost too simple. Humans have used hot water to retain heat for centuries. But what’s been overlooked is how effective it can be as an alternative to the introduction of expensive electrical batteries. With an estimated energy loss of just 5–15% over months of storage, and costs around €0.4 per kWh compared to over €200 per kWh for lithium-ion batteries, the economics are compelling.

Long-term, low-maintenance investment

The €200 million project is being funded in part by a €19 million grant from Finland’s Ministry of Economic Affairs and Employment, with construction on the entrance set to begin later this year. It’s expected to go live in 2028. Vantaa Energy, the project’s developer, expects a lifespan of around 50 years for the infrastructure. It’s a long-term, low-maintenance investment, a rarity in the volatile world of energy.

It’s not just the technology that makes this approach appealing. Using cheap, surplus solar energy to heat water in summer, then deploying that heat during cold winter months, means households can avoid exposure to the volatility of gas markets. Solar Heat Europe estimates that district heating using solar thermal systems can deliver heat for as little as €0.3–0.4 per kWh. That makes it one of the most affordable decarbonisation tools on the market.

Is the UK fertile ground for investment in such innovative and cost-effective solutions to the challenge of heating decarbonisation? The government has certainly helped by amending the National Wealth Fund’s mandate, giving it more scope to deploy capital with higher levels of risk appetite in order to act as a guarantor for renewable projects.

But its ‘deal-by-deal’ basis will likely favour large-scale projects with conservative large players. To optimise innovation and encourage private investment, a more effective approach would see the fund picking broad themes, then deciding on the appropriate financing vehicle for each one. Enhancing grid flexibility via thermal storage should be one of these themes.

Hot water, not hot air

We’re stuck with the British weather. It will always be too dark in winter and too hot in

summer. But that doesn’t mean we’re stuck with a brittle, fossil-fuelled energy system. We need to invest in the overlooked and obvious technologies that already exist, and are already working. Heating up water with the sun and storing it underground might not sound revolutionary. But in the right hands, it might just be.