Preface
What is the development trend of home energy storage systems? Home energy storage systems can usually be combined with distributed photovoltaic power generation to form home photovoltaic energy storage systems. Home energy storage systems mainly include two types of products: batteries and inverters.
- (1) Battery trends: Energy storage batteries are evolving towards higher capacities. As household electricity consumption increases, the amount of electricity that each household can carry gradually increases. Batteries can be modularized to achieve system expansion, and high-voltage batteries are becoming a trend.
- (2) Inverter trends: There is an increasing demand for hybrid inverters suitable for the incremental market and off-grid inverters that do not need to be connected to the power grid.
- (3) End product trends: Currently, split-type products are the mainstay, i.e., batteries and inverter systems are used together, and the trend is gradually moving towards all-in-one products.
- (4) Regional market trends: Differences in power grid structure and power markets result in slight differences in mainstream products in different regions. Grid-connected models dominate Europe, the US has more grid-connected and off-grid models, and Australia is exploring virtual power plant models.
Why is the home energy storage market continuing to grow?
Home energy storage is growing rapidly, driven by the dual forces of distributed photovoltaics and energy storage penetration. In terms of photovoltaic installations, Europe’s high energy dependence has exacerbated the energy crisis caused by the Russia-Ukraine conflict, and European countries have successively raised their expectations for photovoltaic installations. In terms of energy storage penetration, rising energy prices have driven up residential electricity prices, making energy storage more economical. Countries have introduced subsidy policies to encourage the installation of residential energy storage.
What is the market development and how big is the market potential?
The United States, Europe, and Australia are currently the main markets for residential energy storage. According to BNEF statistics, in 2020, the installed capacity of new residential energy storage in the United States was 154MW/431MWh, in Europe it was 639MW/1179MWh, and in Australia it was 48MW /134MWh. Assuming that the energy storage penetration rate in the newly installed photovoltaic market in 2025 is 15%, and the energy storage penetration rate in the stock market is 2%, the global household energy storage capacity will reach 25.45GW/58.26GWh, and the compound annual growth rate of installed capacity from 2021 to 2025 will be 58%.
What are the key barriers to entry in the home energy storage industry?
Home energy storage systems are usually used in conjunction with rooftop photovoltaics. The product form is similar to that of small household appliances, and has certain attributes of consumer goods. Thinking from the perspective of a 2C product,
- (1) Channels affect product reach and market coverage. Manufacturers can either build their own overseas channels or achieve sales goals by deeply integrating with channels.
- (2) Technical parameters such as the product’s power capacity, voltage level, and coupling method determine the product’s market positioning. R&D investment and the construction of a service system are the keys to ensuring product competitiveness.
What sectors will benefit?
Batteries and PCS are the two main components of home energy storage systems, and they are the sectors that will benefit the most from the home energy storage market. According to estimates, by 2025, the newly installed capacity of household energy storage will be 25.45GW/58.26GWh, corresponding to 58.26GWh of battery shipments and 25.45GW of PCS shipments in China. We expect that by 2025, the incremental market space for batteries will be 10 billion US dollars, and the incremental market space for PCS will be 3 billion US dollars. Therefore, enterprises in the industry with a high proportion of energy storage business, a large market share, a wide channel layout, and strong brand power will benefit.
Table of contents
- Home storage products
- Market space
- Industry barriers
- Batteries and PCS as core components benefit the most
Storage products: Development towards all-in-one and higher capacity
1. Products: Meeting the supporting needs of existing and new households
Home energy storage is often used in conjunction with household photovoltaics, and the installed capacity is experiencing rapid growth. The core of a home energy storage system, also known as a battery energy storage system, is a rechargeable energy storage battery, usually based on lithium-ion or lead-acid batteries, controlled by a computer, which, in coordination with other smart hardware and software, enables charging and discharging cycles.
Home energy storage systems can usually be combined with distributed photovoltaic power generation to form a home light storage system.
1. User side: While reducing electricity bills, home light storage systems can also eliminate the adverse effects of power outages on normal life.
2. Grid side: Home energy storage equipment that supports unified dispatching can alleviate power shortages during peak hours and provide frequency correction for the power grid.
According to the different coupling methods of photovoltaic and energy storage systems they are divided into DC-coupled systems and AC-coupled systems, which are suitable for the incremental market of newly installed photovoltaic systems and the stock market of installed photovoltaic systems, respectively. The incremental market has more space and is the main driving force for future market growth:
(1) Incremental market (DC-coupled products): DC-coupled energy storage systems have a battery system and a hybrid inverter. The advantage of DC coupling is that the hybrid inverter converts both the photovoltaic system and the energy storage battery, so installing an additional grid-connected photovoltaic inverter is unnecessary. This results in a higher degree of system integration, making installation and after-sales service more convenient and facilitating intelligent monitoring and control.
(2) Stock market (AC-coupled products): Only a battery and energy storage inverter must be added, without affecting the original PV system. The advantage of AC coupling is high safety. Energy is collected at the AC end, which can be directly supplied to the load sent to the grid or directly charged to the battery through a bidirectional inverter. Low-voltage PV and low-voltage batteries can be used, eliminating the risk of high DC voltage in the energy storage system.
2. Home energy storage systems can be divided into grid-connected systems and off-grid systems
- Grid-connected systems: photovoltaic, and energy storage systems can be connected to the grid, and electricity can be purchased from the grid when the photovoltaic or battery power is insufficient. It suits areas with stable power systems and relatively low electricity prices.
- Off-grid system: suitable for deserts and islands without power grids or areas where the power grid is unstable and self-generation is required. Off-grid energy storage inverters are used, usually with diesel generator interfaces, to supplement power when the battery power is insufficient at night.
- On-grid and off-grid all-in-one machine: with on-grid and off-grid switching functions or integrating on-grid and off-grid modes in one machine, which can complete the switch to off-grid mode during power outages, suitable for areas with unstable power systems and frequent power outages.
The core hardware equipment of the home energy storage system includes batteries and inverters. According to the degree of product integration, there are two main models: integrated and split. The current market is dominated by split, but integrated is the development trend of the high-end market:
(1) Split: some AC-coupled and DC-coupled products adopt the split model. The battery and inverter systems are provided by pack and inverter manufacturers, respectively, and then reach the end user through integrators, dealers, and installers.
(2) Integrated: the product is an integrated system that includes batteries and inverters, usually AC-coupled products. Upstream battery systems and inverters are provided as suppliers, usually in an OEM model. The supplier’s brand is not presented in the final product, and the sales and after-sales of the product are all borne by the brand.
Battery packs can be divided into HV batteries and LV batteries according to voltage levels. The industry is trending towards high-voltage batteries, mainly used to improve efficiency and simplify system design. However, they place higher demands on cell consistency and BMS management capabilities. High-voltage batteries usually have a battery pack voltage of 48V or higher, which can be achieved by connecting multiple cells in series.
In terms of efficiency, a high-voltage energy storage system with the same capacity as a battery has a lower battery current and is more efficient. It is also more straightforward in structure, smaller in size, lighter in weight, and more reliable. However, a high-voltage battery is made up of multiple cells connected in series and parallel. The higher the voltage, the more cells that need to be connected in series and the higher the consistency requirements for the cells. At the same time, it must be matched with an efficient BMS management system otherwise, it is prone to faults.
The industrial chain of energy storage all-in-one machine batteries:
1) Integrators: only do branding and source all equipment externally. Usually, they source cells and inverters externally, integrate the products, and sell them under their own brands, with well-established sales channels and strong brand power, such as Tesla and Sonnen.
2) Inverter manufacturers: sell inverters alone or integrate batteries/all-in-one machines by outsourcing cells. Inverter manufacturers benefit from the brands and channels they have accumulated in the photovoltaic inverter industry and can quickly expand. The core of the energy storage system lies in the control of the battery by the inverter, that is, the communication between the inverter and the battery. Inverter manufacturers have an in-depth understanding of power electronics technology and have an advantage.
3) Cell manufacturers: There are two modes of participation. One is to supply cells to downstream brands without participating in product integration and without brand exposure. Examples include Penghui Energy, Contemporary Amperex Technology, and EVE Energy. Cell manufacturers have a more diverse business scope and with a wide range of application scenarios. On the one hand, they can benefit from the home storage industry’s rapid growth; on the other hand, they can create synergies with different businesses. The other model is to produce battery systems for individual sale or outsource inverter modules to complete hardware integration and software design, such as BYD and Pnen Technology.
There are two major trends in the business models of industry chain participants: (1) inverter and battery cell manufacturers are integrating their operations and carrying out product integration, which can strengthen control over sales channels and improve profitability;
(2) some manufacturers focus on equipment supply, which can open up more customers and a wider range of application scenarios and win by volume.
3. System investment cost
| Final price (£) | Capacity | Unit | Price | Unit | |
| Photovoltaic modules | 1800 | 4.68 | Kw | 0.3 | £/W |
| Photovoltaic inverters | 1500 | 4.68 | Kw | 0.2 | £/W |
| Energy storage systems | 3600 | 5.2 | Kwh | 0.5 | £/W |
| Other auxiliary materials | 1900 | ||||
| Installation fees | 1500 | ||||
| Total | 10300 | 4.68 | Kw | 1 | £/W |
4. Trend of all-in-one battery
Regarding battery trends, energy storage batteries are evolving towards higher capacities. As household electricity consumption increases, the amount of electricity carried per household gradually increases. Some products can expand the system capacity through modularization. Due to the penetration of new energy vehicles, the increase in power of household appliances, and the impact of working from home, household electricity consumption has increased, leading to a rise in the amount of electricity carried for energy storage.
(1) Regional market: The total power capacity per household is gradually increasing. Taking the German market as an example, the average power capacity in 2021 is 8.8 kWh, while the data for the same period in 2020 was 8.5 kWh and 8 kWh in 2019. The increase in power capacity in the German market is mainly due to the development of new energy vehicles and the rise in household electricity consumption.
(2) Modular batteries for easy expansion: The power and capacity of a single product is limited, so manufacturers will set up products that can be configured flexibly through modular combinations to meet the needs of different capacity scenarios.
| Battery | Type | Coupling Method | Configuration Flexibility | Capacity |
| Enphase IQ Battery | LFP | AC | Up to 4 modules | 3.36, 10.08 kWh |
| Generac PWRcell | NMC | DC | Up to 2 modules | 9, 12, 15, 18 kWh |
| Tesla Powerwall | NMC | AC | Up to 10 modules | 13.5 kWh |
| Panasonic EverVolt | NMC | AC or DC | DC-coupled battery Up to 6 modules | 11.4, 17.1 kWh |
| Sonnen eco | LFP | AC | 5, 7.5, 10, 12.5, 15, 17.5, 20 kWh | |
| LG Chem RESU | NMC | AC | Up to 2 modules | 9.3 kWh |
| Electriq Power PowerPod 2 | LFP | AC or DC | Up to 3 modules for AC-coupled batteries and up to 4 modules for DC-coupled batteries | 10, 15, 20 kWh |
| SunPower SunVault | LFP | AC | 12, 24 kWh | |
| SolarEdge Energy Bank | NMC | DC | Up to 3 modules per inverter, up to 3 inverters per system | 9.7 kWh |
(3) Batteries are moving from low voltage to high voltage: Higher voltage battery systems generate less heat, which can improve system efficiency, simplify circuit structure, and facilitate system installation. High-voltage battery systems have become an industry trend with the improvement of battery manufacturing technology and battery management system control technology.
| Battery | Type | Volt | Capacity | Output power (kw) | Price ($/kwh) |
| LG RESU H Series | NMC | 400 | 6.5/9.8 | 3.5/5 | 795 |
| BYD Premium HVM | LFP | 150-400 | 2.76 | 2 | 870 |
| Sungrow ES-SGR-SBR | LFP | 192-512 | 9.6 | 1.92 | 650 |
| FIMER Power X FIM-BATT | LFP | 180-360 | 9.6/12.8/16 | 3.8/5.1/6.4 | |
| SolarEdge BAT10K | LFP | 350-450 | 10 | 5 | 985 |
5. Inverter Demand Trend
(1) The newly installed photovoltaic power generation and storage systems have sufficient power, and there is an increased demand for hybrid inverters: Since the current household energy storage system market is dominated by incremental markets (newly installed distributed photovoltaic users with matching energy storage), there is an increased demand for hybrid inverters. The stock market already has PV grid-connected inverters, so when installing energy storage systems incrementally, they choose energy storage inverters, while the incremental market generally combines PV inverters and energy storage converters into hybrid inverters. Users are more inclined to install energy storage when installing new PV, mainly because the uncertainty of overseas net metering policies for household PV has increased, and the uncertainty of household PV income has increased. Users are motivated to configure energy storage to achieve self-generation and self-use, reducing income uncertainty.
(2) Markets such as the United States and South Africa drive demand for off-grid inverters: The United States is prone to frequent natural disasters, with a high risk of power outages. Moreover, the US power grid is relatively weak and ageing. In order to stabilise the grid, some power companies do not allow photovoltaic systems to connect to the grid. Therefore, off-grid systems are needed to generate and use power independently, replacing generators. The US market is growing rapidly, and demand for off-grid energy storage converters that meet the needs of the US market has increased significantly. Deye has integrated the design of grid-connected and off-grid modes into the same machine. With outstanding cost control capabilities, the products are popular in the US market.
6. Terminal product trend: gradually developing towards all-in-one machines.
Usually, the battery system is provided by the battery manufacturer, and the inverter manufacturer provides the hybrid inverter. The battery and inverter are sold together based on their compatibility when sold through channels. Products from different brands can cause complications during installation and after-sales. Therefore, pack manufacturers and inverter manufacturers have begun to get involved with each other. Some inverter manufacturers (such as Sungrow Power Supply, Huawei, and Goodwe) have purchased cells and assembled their own packs, integrating batteries and inverters for sale.
The overall price of all-in-one terminals is higher, but the high integration of all-in-one units reduces the difficulty of installation and saves installation costs. Hardware costs account for less than half of the overall cost, while subsequent labor costs, including installation, service, design, subsequent grid-connection applications, subsidy applications, etc., account for the majority. All-in-one units can save subsequent costs and gradually gain recognition in the high-end market.
Market space: Photovoltaic + energy storage is expected to add 58 GWh of installed capacity
Home energy storage is usually used in conjunction with household photovoltaics, and the installed capacity has ushered in rapid growth. In 2015, the annual newly installed capacity of home energy storage worldwide was only about 200MW. Since 2017, the global installed capacity has grown significantly, and the annual growth rate of newly installed capacity has increased dramatically. By 2020, the global freshly installed capacity will reach 1.2GW, a year-on-year increase of 30%.
Europe and the United States are the markets with the most significant growth potential globally. According to IHS Markit statistics, the global new household energy storage shipments in 2020 were 4.44GWh, a year-on-year increase of 44.2%. , Europe, the United States, Japan and Australia are at the forefront, accounting for 3/ 4. The German market is the fastest growing in Europe, with shipments of over 1.1 GWh, ranking first globally. The US also ranked second with shipments of over 1 GWh. Japan’s shipments in 2020 were nearly 800 MWh, far exceeding those of other countries.
1. Demand driven: distributed photovoltaic power generation greatly exceeded expectations
Excessive reliance on foreign energy has brought about an energy crisis, and the Russian-Ukrainian war has exacerbated the conflict—natural gas accounts for a high proportion of Europe’s energy structure, accounting for about 25%. According to the BP World Energy Statistics Yearbook, fossil energy accounts for a high proportion of Europe’s energy consumption structure, of which natural gas accounts for a stable proportion of about 25%. Europe has a high degree of reliance on foreign natural gas and mainly relies on imports. Among the sources of natural gas, 80% comes from imported pipelines and liquefied natural gas, of which 13 billion cubic feet per day of pipeline gas imported from Russia accounts for 29% of the total supply. Excessive reliance on foreign energy has seriously affected energy security. The government hopes to reduce dependence and maintain national security. Russia’s suspension of natural gas supply to Europe will threaten its energy supply, and it is urgently necessary to develop clean energy to ensure it.
Policymakers are accelerating the energy transition and raising expectations for installed photovoltaic capacity. To ensure energy security, countries have introduced policies to accelerate the pace of the energy transition. Germany has brought forward the target of generating 100% of its electricity from renewable sources from 2050 to 2035, achieving 80% of electricity generated from renewable sources by 2030, generating 600TWh of solar power, and installing 215GW of photovoltaic capacity by 2030. The European Commission has adopted the REPowerEU proposal to raise the EU’s 2030 renewable energy target. The 2030 renewable energy target may be raised again to 45%. Several initiatives will support distributed photovoltaics:
1) The European Photovoltaic Roofs Initiative is expected to increase electricity generation by 17 TWh in the first year of implementation (17% higher than previously forecast) and generate an additional 42 TWh by 2030.
2) By 25 years, all suitable public buildings will have installed photovoltaics.
3) All new buildings must install photovoltaic roofs, and the approval process must be controlled within three months.
| Country | Before adjustment | New policy |
| Germany | 100% renewable by 2050, with an average of 5GW of new photovoltaic installations each year | 100% renewable power generation by 2035, with an average annual increase of 17.2GW of new installed capacity by 2030 |
| United Kingdom | Cumulative installed capacity of 14.6GW by 2021, including 5GW of household photovoltaics | By 2035, the installed capacity of photovoltaics will increase five-fold from the current 14GW, with an average annual increase of 5GW of new installed capacity. |
| European Union | Increase the proportion of renewable energy from 32% to 40% by 2030 | The proportion of renewable energy will be increased again to 45% by 2030 |
From the perspective of household photovoltaic penetration, major photovoltaic demand countries in overseas started with distributed installations. For example, in the early stages of photovoltaic development in Japan, Australia, and the United States, new installations were mainly on residential roofs. At the same time, due to their early start, the photovoltaic penetration rate in Europe and Australia is much higher than that in China. The household photovoltaic installed capacity in Australia, the United States, Germany, and Japan accounts for 66.5%, 25.3%, 34.4%, and 29.5% of the total photovoltaic installed capacity, respectively. The proportion of household installed capacity in developed countries is more than 10 times that of China. The proportion of distributed photovoltaics overseas is higher for two reasons:
(1) Europe has a high level of urbanization, and housing is dominated by detached or semi-detached houses suitable for developing household photovoltaics. According to data from 2016, there were 135.6 million housing units in the United States, of which 95 million were villas or townhouses, accounting for about 66%. According to the “Japanese Housing and Land Statistics Survey 2013”, the number of detached houses in Japan accounted for 54.9% in 2013, occupying the leading share of the total number of houses. In terms of the number of stories of residential buildings, 84.9% are 5 stories or less. In the Tokyo metropolitan area, the proportion of detached houses also remained high at 40.7% in 2013. The average proportion of detached and semi-detached houses in Europe is as high as 57.4%, and the proportion of detached and semi-detached houses in the UK is over 80%. In contrast, the types of houses in China are very different, with high-rise buildings dominating and detached and semi-detached dwellings mainly concentrated in rural areas and urban suburbs.
(2) Policy support for household photovoltaic power generation for self-consumption. Europe implements a net metering policy for photovoltaic power generation. Consumers with renewable energy power generation facilities can deduct a portion of the electricity they feed into the grid from their electricity bills, and only the net consumption is calculated. This policy dramatically improves the economics of distributed photovoltaic power generation for self-consumption and feeding surplus electricity to the grid. Countries have relatively high subsidies for distributed photovoltaic power generation, low bank loan interest rates, and low financing costs for photovoltaic systems. There are no problems with subsidy arrears, which has stimulated the willingness to install.
| Country | Time | Policy |
| Netherlands | 2020 | The Netherlands introduced a ten-year net metering to support residential PV. The Dutch government plans to reduce electricity prices by 9% each year from 2023 to 2030. |
| Italy | 2022 | Simplified installation approval procedures for commercial rooftop PV systems with installed capacities between 50kW and 200kW 267 million euros (294 million US dollars) allocated for tax rebates to help businesses cover part of the cost of buying and installing solar arrays |
| Switzerland | 2020 | An additional 46 million Swiss francs ($47.5 million) was allocated to the residential and commercial rooftop solar subsidy program. This additional amount raised the subsidy budget to 376 million Swiss francs. |
2. Demand-driven: electricity prices + subsidies drive the penetration of energy storage
The current penetration rate of home storage is relatively low, leaving plenty of room for improvement.
1) United States: According to statistics from the Berkeley Laboratory, only 6% of US households use energy storage paired with photovoltaics. The highest combined proportion of solar and energy storage is nearly 80% in Hawaii, followed by California, with a penetration rate of 8%, and other regions, with only about 4%.
2) Germany: According to statistics from ISEA RWTH Aachen, by 2021, there will be a cumulative total of 430,000 household energy storage installations in Germany. The current penetration rate of energy storage on all rooftops is only 1.1%. In 2021, Germany 145,000 new energy storage households will be added, of which 93% will be new PV with energy storage and 7% will be existing PV retrofits. 215,000 new PV households will be added, and the proportion of new PV and energy storage systems will reach 63%.
With the increasing demand for energy security and power stability, the implementation of policy subsidies, the increase in residential electricity prices, and the decrease in the cost of energy storage systems, the tendency to install energy storage systems will become stronger, and there is significant room for the penetration rate of energy storage systems to increase significantly.
Short term: Rising electricity prices impact the economic viability of energy storage and act as a catalyst for market growth. However, the impact is limited and not a decisive factor. Assuming an annual household electricity consumption of 4000kwh, 60% of which is used in the evening, a 5kw photovoltaic system + 10kwh energy storage system is installed, the annual photovoltaic power generation hours are 1000 hours, the photovoltaic investment cost is 1.3 euros/w, storage investment cost 0.8 euros/wh, residential electricity price 0.3464 euros/kw. The initial investment was 14,500 euros, of which 6,500 euros were spent on the photovoltaic system and 8,000 on the storage system. According to the Federal Bureau of Statistics, the average annual income of a German household is 56,000 euros, and the cost of installing a photovoltaic system accounts for 25% of the yearly household income. The cost savings of installing a PV system with storage over the entire life cycle (20 years) are €16,601, and the cost savings are €9,338 compared to just installing a PV system. The return on investment for installing a PV system with storage is 8.25%, and the payback period is 11 years. If electricity prices rise by 50%, the payback period is shortened to 8 years.
Medium term: The replacement of new energy sources is a definite trend. The large-scale connection of new energy sources has caused pressure on the power grid. To promote the installation of energy storage systems, medium-term policy subsidies should be as specific and continuous as possible. From the perspective of power grid stability, the pressure on the grid is caused by the large-scale connection of new energy sources, and the government’s guiding power generation/user allocation of energy storage through subsidies and other policies is the result. The underlying logic of subsidies for distributed photovoltaics + energy storage in European countries is to reduce the pressure on the power grid from power distribution through distributed systems. The UK exempted residential photovoltaic systems from value-added tax in April 2022. Italy increased the tax reduction for home storage equipment to 110% in 2020, and countries such as Poland and Sweden have set up budget subsidies for residential photovoltaic storage systems.
| Country | Time | Policy | Content |
| UK | 2020 | From April 1, 2022, the value-added tax (VAT) on heat pumps and solar modules used in residential solar applications will be reduced from 5% to 0 for a period of 5 years | |
| Italy | 2020 | Ecobonus | Tax credits for domestic energy storage devices will be increased from the original 50-65% to 110 |
| Switzerland | 2020 | Residential and commercial rooftop solar subsidy program | An additional CHF 46 million (USD 47.5 million) is allocated to the residential and commercial rooftop solar subsidy program. This additional amount raises the subsidy budget to CHF 376 million, funded by a levy on electricity consumers to fund the development of renewable energy. |
| European Union | 2019 | Clean Energy Package | Decrees 2019/943 and 2019/944 propose strong support for the development of the domestic energy storage market and the removal of financial barriers that may exist in its development |
| Germany | 2019 | German Renewable Energy Law | raising the tax-deductible limit for household energy storage systems from 10 kW to 30 kW |
| Poland | 2019 | AGROENERGIA program | allocating a total of 200 million zlotys for household photovoltaic/wind power + energy storage systems with a capacity of 10-50 kW |
| Sweden | 20016 | Household energy storage subsidy program | providing subsidies for household energy storage systems, covering 60% of the installation costs, up to a maximum of 5,400 |
Long term: With economies of scale and technological progress, system costs are set to fall in the long term. According to Solar Power Europe, between 2015 and 2019, the cost of small photovoltaic systems fell by around 18%, and the cost of residential energy storage systems fell by nearly 40%. It is expected that by 2023, the cost of residential photovoltaic systems will fall by a further 10%, while the cost of residential energy storage systems will fall significantly by 33%. In the short term, system costs will fluctuate slightly due to fluctuations in supply and demand, but in the long term, the trend of technological cost reduction is certain. In 2021, the LCOE of a residential PV system with energy storage will be 10.1 euro cents/kWh, and that of a PV system will be 14.7 euro cents/kWh. In the same year, the German household electricity price reached 31.9 euro cents/kWh, and the LCOE of the PV system with storage was about 1/3 of the electricity price. Therefore, installing a PV system with storage is economically viable, and with the rising electricity price and falling cost, the future economic viability will be further improved.
3. Demand trends in Europe, the United States, and Australia
According to Wood Mackenzie statistics, 409.5 MW/902.7 MWh of new household energy storage was installed in the United States in 2021.
(1) in March 2018, the United States issued new rules for residential energy storage system tax credits at the federal level. For residential energy storage systems, if a user installs a battery energy storage system one year after installing a photovoltaic system, and the condition that 100% of the stored electricity comes from photovoltaic power generation is met. This energy storage system can also receive a 26% tax credit.
(2) At the state level, California has launched the SGIP program to subsidize residential power generation. In November 2021, the House of Representatives passed the American Building Better Act, which extended the ITC policy subsidy to 2033 and will provide a maximum 30% incentive credit or 6% essential credit until 2026, which will be credited until the end of 2031 and gradually reduced in 2032 and 2033. For residential energy storage projects, the subsidy standard for energy storage systems with a capacity of less than or equal to 10kW is $0.5/Wh. For energy storage systems with a capacity greater than 10kW, the subsidy standard is $0.5/Wh, and they cannot also receive the investment tax credit (ITC). If you want to receive the ITC simultaneously, the SGIP subsidy standard is reduced to $0.36/Wh.
| Time | Policy content |
| 2000-2004 | The California government allocated 138 million US dollars to subsidize distributed generation |
| 2009 | The compensation object was expanded from “distributed generation” to “distributed energy resources”, so that independent energy storage facilities also began to enjoy compensation. The SGIP was extended to 2015, and California budgeted $83 million per year for the SGIP from 2010 to 2011. |
| 2011 | The CPUC modified the program’s incentive eligibility criteria to support technologies that achieve GHG emission reductions. Eligible technologies include energy storage, wind turbines, pressure reduction turbines, fuel cells, waste heat collection and cogeneration, internal combustion engines, microturbines, and gas turbines. |
| 2014 | The SGIP was extended through 2020, with 75% of the total incentive budget allocated to energy storage technologies |
| 2018 | The SGIP was extended through 2024, with a greater focus on the energy storage side, providing $800 million in support for energy storage and other clean energy technologies |
| 2019 | More than $500 million was invested in technologies including energy storage again |
Europe is the world’s largest home energy storage market. According to BNEF statistics, in 2020, Europe added 1.2GW/1.9GWh of new energy storage capacity, of which 639MW/1179MWh was new home energy storage, a year-on-year increase of 90%, accounting for 52% of the new market. As of 2020, Europe’s cumulative home energy storage capacity reached 1.6GW, making it the world’s largest market. According to Solar Power Europe statistics, European residential electrochemical energy storage grew strongly in 2020, with a total of about 140,000 systems installed. Among these, Germany, Italy, the United Kingdom, Austria, and Switzerland accounted for more than 90% of the growth in the European residential market, with Germany alone accounting for more than two-thirds of the market.
Australia is well-placed to develop residential energy storage, and there is still massive room for growth in the future. Australia is a vast country with a sparse population, and electricity is mainly transmitted over long distances. Therefore, distributed energy sources have been vigorously developed, and technologies such as microgrids and energy storage can improve electricity use reliability while reducing grid load fluctuations. Accelerating the promotion of residential battery systems in Australia is increasingly essential for the continued promotion of solar energy and the decarbonization of the grid while also helping to improve long-term energy affordability and reliability. According to BNEF statistics, in 2020, Australia added 48MW/134MWh of new household energy storage installations. Australia has good conditions for developing household energy storage, but currently only accounts for 5% of the global market, and there is huge room for development in the future.
Future energy storage trends in Australia
- Australia has the world’s highest level of light resources, with more than 80% of the country having an irradiance exceeding 2000kW/m2/h. With the exact system cost, the cost of photovoltaic power generation in Australia is only half that in Germany.
- Policy support: The Australian government issues Small-scale Technology Certificates (STCs) to users who install household photovoltaic systems through the Small-scale Renewable Energy Scheme (SRES). High energy consumption users must also purchase certain STCs to fulfill their obligations under the RET. At the same time, the state governments of Australia provide FiT subsidies for household photovoltaics.
- High home ownership and single-family home rates. The prerequisite for installing a household PV system is an independent roof, so apartments in concentrated living areas generally do not have the conditions to install a household PV system. According to census data from statistical agencies in various regions, the proportion of households living in detached/semi-detached houses in the total number of households in the EU/US/Japan/Australia exceeds 50%. The housing structure dominated by detached houses is the premise for the large-scale development of household PV systems in these regions.
- Electricity prices in Australia are rising. Judging from wholesale electricity prices, with the large-scale entry of solar power into the electricity market, electricity prices during the day when solar power is generated will decrease, while electricity prices will peak at night. There is an urgent need for energy storage to help shift electricity consumption.
4. It is estimated that the global household energy storage capacity will increase by 58.26GWh in 2025
The distributed PV installed capacity is calculated based on the number of households, and the number of installed household energy storage systems is obtained by considering the penetration rate of household energy storage. Assuming that the average installed capacity per household can be obtained, the global and market household energy storage installed capacity can be obtained. We estimate that, assuming an energy storage penetration rate of 15% in the new PV market and 2% in the stock market in 2025, the global household energy storage capacity will reach 25.45GW/58.26GWh, and the compound annual growth rate of installed capacity from 2021 to 2025 will be 58%.
Household energy storage installed capacity calculation
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
| Cumulative household PV installed capacity/GW | 103 | 146 | 220 | 310 | 414 | 535 |
| New household PV installed capacity/GW | 28 | 44 | 74 | 90 | 104 | 121 |
| Penetration rate of existing capacity (%) | 0.4% | 1.0% | 1.2% | 1.5% | 1.8% | 2.0% |
| Penetration rate of new capacity (%) | 0.4% | 7.0% | 9.0% | 12.0% | 14.0% | 15.0% |
| Distribution and storage duration (h) | 2.2 | 2.3 | 2.3 | 2.3 | 2.3 | 2.3 |
| New installed capacity (GWh) | 2.8 | 9.27 | 18.99 | 31.7 | 44.89 | 58.26 |
| Existing capacity-energy storage installed capacity (GWh) | 0.28 | 2.88 | 3.82 | 7.02 | 11.55 | 16.7 |
| New capacity-energy storage installed capacity (GWh) | 2.25 | 6.99 | 15.17 | 24.68 | 33.34 | 41.56 |
| New power (GW) | 1.25 | 4.05 | 8.29 | 13.85 | 19.61 | 25.45 |
Industry barriers: product and channel barriers
1. Channel
The home energy storage market is mainly concentrated in countries and regions with high household PV penetration and high residential electricity prices, such as the United States and Europe. Home energy storage products are usually used in conjunction with PV systems and have certain attributes of consumer appliances. With a reasonable channel layout, downstream customers can be reached quickly.
There are two main types of channels in the US market:
one is to target the stock market through distribution channels. Products are sold to PV installers through distributors, who then sell them to households that have already installed household PV.
The other type of channel is to target the new market through construction companies. Construction companies will purchase products in bulk when building new homes.
Distributors in major markets for home energy storage (partial)
| Region | Distributor | Upstream brand |
| Australia | AUSTRAILA WIDE SOLAR | Tesla, Solar Edge, LG, Victron, SMA, BYD, sonnen, Jinko, Huawei, Longi, Sunshine, Q-cell |
| Alpha-ess | Goodwe, EVE Energy | |
| EVO power | LG, Contemporary Amperex Technology | |
| EKOenergy | Tesla, Alpha ess | |
| zen energy | Tesla | |
| AGL Tesla | Tesla, Sunshine | |
| one stop warehouse | Solar Edge, Goodwe, Huawei, Sunshine, BYD, alphaess, LG, Q cell | |
| ACSolarwarehous | LG, Sunshine, enphase, sonnen, Solar Edge | |
| Europe | Elevate solar | Tesla, LG |
| segen | Alpha ESS, FOX ESS, Tesla, PIONEER, Solax | |
| energySRL | PIONEER solax solis | |
| IBC SOLAR SAU | sunshine, LG, BMZ, BYD, ENPHASE | |
| krannich | BYD, sunshine, GOODWE, PIONEER, ENPHASE, LG, SOLAX, HUAWEI | |
| MEMEDO | BMZ, LG, Tesla, SOLAREDGE, BYD, GOODWE, sunshine | |
| United States | American Sunshine | sunshine |
| krannich | solax, BYD, ENPHASE, LG, SMA, solaredge |
2. Products
Home energy storage products come in various types and have a wide range of capacities. Home energy storage products can be divided into several categories based on their capacity, voltage level, coupling method, etc.: small battery systems, low-voltage modular battery systems, high-voltage modular battery systems, AC-coupled battery systems, off-grid battery systems, all-in-one solar battery systems. The capacity of these products ranges from 5-500kwh, and users can choose the right product according to their household power needs.
|
Product
|
Brand and Model
|
Product Type
|
Capacity
|
Cost per kWh
|
|---|---|---|---|---|
|
Sungrow SBP4K8
|
5kwh Small battery system
|
4.8Kwh
|
$830
|
|
BYD LVS & LVL
|
LV Battery Ststem
|
4-256 Kwh
|
$750
|
|
Huawei LUNA2000
|
HV Battery Ststem
|
5-30 Kwh
|
$760
|
|
Tesla Powerwall
|
AC battery system
|
13.5 Kwh
|
$815
|
|
Keheng
|
All-in-one ESS
|
5 Kwh
|
$400
|
Batteries and PCS benefit the most
Batteries and PCS are the two main components of home energy storage systems, and they are the most beneficial part of the home energy storage market. According to our calculations, in 2025, the newly installed capacity of home energy storage will be 25.45GW/58.26GWh, corresponding to battery shipments of 58.26GWh and PCS shipments of 25.45GW. Assuming that the price of batteries in 2021 is $0 .2/wh, and the price of PCS is $0.12/w, with a 5% annual decrease (the price of batteries has increased due to the rise in upstream raw material prices this year). It can be calculated that by 2025, the incremental market space for batteries will be 10 billion US dollars, and the incremental market space for PCS will be 3 billion US dollars.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
| New household installed capacity (Gwh) | 2.8 | 9.27 | 18.99 | 31.7 | 44.89 | 58.26 |
| New household power (GW) | 1.25 | 4.05 | 8.29 | 13.85 | 19.61 | 25.45 |
| Battery unit price (USD/wh) | 0.22 | 0.2 | 0.22 | 0.21 | 0.2 | 0.19 |
| Battery market space (USD 100 million) | 6.5 | 18 | 41 | 67 | 90 | 112 |
| Converter unit price (USD/w) | 0.14 | 0.13 | 0.13 | 0.12 | 0.12 | 0.11 |
| Converter market space (USD 100 million) | 1.9 | 5.6 | 11 | 18 | 24 | 30 |
1 thought on “Home Energy Storage Industry Analysis Report”
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