ESREE Energy secures funding to commercialise gravel-based thermal storage for industrial decarbonisation

ESREE Energy, a startup based in Tokyo focusing on climate tech, has recently secured a new funding round to speed up the development of its innovative gravel-based thermal energy storage and related industrial heat technologies. The company mentioned that this fresh investment, led by United and also joined by Digital Grid and ReGACY Innovation Group, will be used mainly for research and demonstration projects. The goal is to create low-cost, dispatchable heat sources that can support factory processes more sustainably. According to an official statement released on PR TIMES on February 26, 2026, this infusion of capital aims to push their technology closer to commercialization.

The core concept behind ESREE’s approach involves storing excess renewable electricity as heat in beds of crushed rock. This stored thermal energy can then be retrieved later, think during nighttime hours when solar power dips, to generate industrial steam. At the same time, ESREE is working on a pumped thermal energy storage (PTES) system that combines high-temperature heat pumps with a Rankine cycle. The company claims that this system could not only help decarbonize industrial heating but also offer a pretty handy form of long-duration energy storage that’s economically feasible.

Interestingly enough, the timing of ESREE’s funding round aligns with a bigger shift happening worldwide, there’s growing policy and research focus on technologies that convert renewable power into heat, then store it for later industrial use. For instance, in the U.S., government programs have recently zeroed in on geothermal and thermal storage pathways. The Department of Energy’s 2024 support, for example, included funding for low-temperature thermal energy storage demonstrations tailored for industrial applications. Other initiatives are backing concentrated solar-thermal fuels and cost-effective thermal storage tech. All these efforts highlight a broader push to match renewable energy with the high-temperature, continuous heat demands typical of many manufacturing sectors.

Experts in the industry note that nearly half of the world’s final energy consumption comes from heat, much of which is tied up in industrial processes. ESREE emphasizes that many industrial steps require extremely high temperatures, consistent volumes, and an uninterrupted supply, which makes direct electrification tricky and has slowed the decarbonization of the heat sector. The startup is initially aiming to deploy its tech in regions where renewable generation is already well-developed, offering factories a low-carbon alternative to fossil-fueled steam.

On the research front, ESREE has made progress with laboratory prototypes. The company told PR TIMES that they’ve built a small-scale gravel storage test rig and plan to run validation tests with low-pressure steam users to demonstrate the practical supply of decarbonized steam. The latest funding will help fund these research and demo activities as ESREE moves towards turning its concept into a full-fledged product.

Just to give a sense of the bigger picture, there are other private and public R&D efforts exploring different routes for thermal storage. For instance, a U.S. small business program recently backed the development of a CO₂-based thermo-mechanical “heat battery” designed for longer-duration storage. National labs and research agencies are also funding projects that combine high-temperature charging devices, affordable storage modules, and innovative power cycles aimed at making thermal storage competitive with batteries, especially over multi-hour or multi-day durations. Some are even looking into reservoir thermal energy storage (RTES) systems that tap into subsurface heat capacity to extract industrial heat in sectors like food processing and pulp drying.

ESREE’s gravel-based method aims to keep things simple and cost-effective. Instead of expensive bespoke systems like molten salt or specialized ceramic blocks, it uses readily available crushed rock, which could reduce capital costs. The company believes that the straightforward nature of heated gravel beds, combined with heat pumps and turbines for flexible operation, could provide a practical and cost-competitive way to supply industrial steam.

Of course, how well this approach holds up in the real world remains to be seen. Businesses operating energy-intensive facilities tend to scrutinize solutions based on reliability, how well they integrate with existing equipment, cost per tonne of steam, and ease of operation. ESREE’s planned trials with actual steam users aim to clarify aspects like performance, efficiency, and maintenance under real industrial conditions.

For regions such as the Gulf, where industrial heat demand is high and solar resources are plentiful, these kinds of technologies could be particularly appealing. Policymakers and companies in places like the UAE are actively seeking decarbonization options that maintain process continuity while tapping into abundant solar power. ESREE’s model, matching daytime renewable generation with thermal storage scaled to factory heat profiles, addresses exactly that challenge.

Founded in May 2023 and led by CEO Takafumi Iwata, ESREE positions itself as part of a broader movement to expand low-carbon solutions for industrial heat and explore long-duration energy storage beyond just batteries. As governments and investors around the world ramp up support for thermal storage and heat-focused decarbonization efforts, ESREE’s goal is to leverage its recent funding to go beyond laboratory prototypes and demonstrate its gravel thermal storage system in real industrial settings.