Seasonal storage of solar energy is necessary to achieve high solar fractions of 50 and more per cent of the total heat demand in housing developments. One main requirement for heat-storage units is a low specific cost so that the solar heat price can be reduced and becomes more competitive in the near future with the heat prices of conventional fossil fuels. Another important target is the integration of large seasonal storage units in housing areas to save ground area. The gravel/water storage pit is one of the most promising long-term heat-storage techniques with respect to the mentioned topics. A gravel/water storage pit of the third generation, which is currently being built in Steinfurt, near Munster/Germany, is presented in this paper. The technical innovations of the new generation type are described compared to the state of technology. The ecological compatibility of the used materials is proved. The high cost-reduction potential of the introduced storage technique is shown by a detailed calculation of the cost for the storage pit in Steinfurt and an upscaled storage unit with 16,000 m(3) volume of water-equivalent. The main innovations of the new technique are the thermal insulation, which consists of granulated recycling glass and a new lining material that is installed in double layers. By using new materials. the operating temperatures of the storage can be risen up to 90 degreesC. (C) 2000 Elsevier Science Ltd. All rights reserved.