Terrafold raised EUR 140 million on Thursday in a round led by Temasek with participation from Breakthrough Energy Catalyst, Just Climate, and the Dutch state investment fund Invest-NL. The Amsterdam company builds thermal storage systems that heat crushed basalt to about 1,000 degrees Celsius using electricity when it is cheap, then release that heat as process steam over the following hours. The target customers are food processing, chemicals, paper, and textile plants that burn gas for steam and cannot easily switch, because industrial heat accounts for roughly a fifth of global energy consumption and has almost no decarbonization pathway that customers will actually pay for.
Why industrial heat is stuck
A factory that needs steam at 180 degrees Celsius has a gas boiler, and the gas boiler is cheap, reliable, and paid for. Replacing it with an electric boiler works technically and fails economically in most European markets, because electricity per unit of energy costs three to five times what gas does. Industrial heat pumps help for lower temperatures and top out around 150 degrees for commercially available units.
The result is that industrial heat emissions have barely moved while electricity generation has decarbonized substantially. Policy has not helped much: carbon pricing under the European trading scheme reached levels that matter only recently, and free allocation for trade-exposed industries blunted the signal for years. Companies want a solution and will not pay a premium for one, which is the constraint every entrant in this space runs into.
The arbitrage that makes it work
Terrafold's economics do not depend on electricity being cheaper than gas on average. They depend on electricity being much cheaper than gas during some hours. In markets with high wind and solar penetration, wholesale prices go negative several hundred hours a year and sit near zero for many more. A system that charges during those hours and discharges continuously converts intermittent cheap power into steady process heat.
The technology has to be cheap enough per unit of storage to make that arbitrage profitable, which is why the medium is crushed basalt rather than anything engineered. Rock costs almost nothing, tolerates thousands of thermal cycles without degradation, and holds heat well. The engineering difficulty is in the insulation, the resistive heating elements that operate at those temperatures, and the heat exchanger that extracts steam at a controlled rate. Chief executive Sanne de Vries said the heat exchanger consumed most of the company's development time.
The story is rarely the launch. It is what breaks, what ships, and who owns the mess at 2 a.m.
What is deployed
Four systems are running: two at food processing plants in the Netherlands, one at a Belgian chemical facility, and one at a paper mill in Sweden. The largest stores 92 megawatt-hours of thermal energy and delivers 8 megawatts of steam continuously. The Swedish installation has been operating for fourteen months and its operator reported to us that gas consumption fell 71 percent, with the remainder covering periods when electricity prices stayed elevated for extended stretches.
That 71 percent is the honest number for this technology. Full displacement requires either enough storage to ride through a week of high prices, which is uneconomic, or a willingness to buy expensive electricity, which defeats the purpose. Terrafold sells it as a hybrid: keep the gas boiler for the worst periods and displace most of the fuel. Customers find that easier to approve than a full replacement, since it preserves the existing equipment as backup.
The competition
Rondo Energy in California uses heated brick with a similar concept and has deployments in the United States and a manufacturing partnership in Asia. Antora Energy uses carbon blocks and adds thermophotovoltaic conversion back to electricity. Kyoto Group in Norway uses molten salt at lower temperatures. Each has raised substantial capital and each is deploying at single-digit unit counts, which tells you the market is early rather than that anyone is failing.
Terrafold's positioning is European and specifically aimed at markets with high renewable penetration and high gas prices, which describes the Netherlands, Germany, Denmark, and increasingly Spain. De Vries said the company will not enter the United States, where cheap gas makes the arbitrage far weaker, which is the sort of focus investors reward and competitors eventually exploit.
What the money is for
Manufacturing. The company assembles systems in a facility near Rotterdam with capacity for about eight units annually, and the round funds an expansion to roughly forty. That is the constraint on growth: the order book, according to de Vries, exceeds current capacity by a wide margin, with signed agreements for eleven systems that cannot be delivered before 2028.
The remainder funds a higher-temperature version targeting 1,400 degrees Celsius, which would open cement and glass, two industries with far larger emissions and far harder engineering. That is a research project rather than a product, and de Vries was careful to describe it as such. The near-term business is steam for factories, which is unglamorous, addressable, and large.
The policy dependency is the one investors should watch most closely. The arbitrage that makes these systems profitable exists because European electricity markets price by the hour and because renewable output regularly exceeds demand. Both conditions are products of market design rather than physics. A shift toward capacity payments, changes to how grid fees are levied on industrial consumers, or a build-out of competing flexibility from electric vehicle charging could each compress the spread these systems capture. De Vries said the company models a spread half its current level and remains profitable at that, which is the right stress test and not a guarantee.
Skarvonix will keep following this beat with reporting grounded in how systems behave outside the launch keynote.
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