How will the global energy storage market develop in the future
Policy subsidies drive energy storage market demand in America
Policy is the biggest driving force for the development of the energy storage market in the United States. According to statistics, 409.5MW/902.7MWh of new household energy storage capacity was installed in the United States in 2021. At the federal level, in March 2018, the United States released the “New Rules for Tax Credit of Residential Energy Storage System”.
For residential optical storage system, if users install the battery energy storage system one year after the installation of the photovoltaic system, and meet the condition that 100% of the stored energy comes from photovoltaic power generation, this set of energy storage equipment can also obtain a 26% tax credit.
At the state government level, California launched the SGIP plan to subsidize household power generation. In November 2021, the House of Representatives passed the Better Construction Act of the United States, extending ITC policy subsidies to 2033, and granting up to 30% of the incentive credit or 6% of the basic credit before 2026. The credit will be reduced gradually in 2032 and 2033 by the end of 2031.
For household energy storage projects, the subsidy standard for energy storage systems with a scale of 10 kW or less is $0.5/Wh. The subsidy standard for energy storage systems larger than 10kW is $0.5/Wh, and they can not get the investment tax relief (ITC) at the same time. If they want to get ITC at the same time, the subsidy standard of SGIP will be reduced to $0.36/Wh.
Electricity price-rises and the economy of energy storage market is improved in Europe
Europe is the world’s largest household energy storage market. According to statistics, in 2020, Europe added 1.2GW/1.9GWh of energy storage capacity, including 639MW/1179MWh of household energy storage, a year-on-year increase of 90%, accounting for 52% of the new market. By 2020, European household energy storage have accumulated 1.6GW, ranking first in the global energy storage market.
In 2020, household electrochemical energy storage in Europe groew strongly, with about 140000 systems installed. Among them, five countries, Germany, Italy, Britain, Austria and Switzerland, grew more than 90% of the household energy storage market in Europe, and Germany alone accounted for more than two-thirds of the energy storage market.
In the next few years, Germany will continue to maintain its leading position in the European household energy storage market. According to the survey, 58% of German household photovoltaic users will consider adding energy storage equipment after the expiration of the FIT contract. Italy will follow closely and maintain its position as the second largest energy storage market.
With the strong support of the government, Austria will surpass the UK to become the third largest energy storage market: Austria has extended subsidies for household photovoltaic and energy storage from 2020 to 2023, with a total budget of 24 million euros, including 12 million euros dedicated to household energy storage.
In addition, with the support of national policies, the parliaments of Switzerland, Spain, Ireland, the Czech Republic and Sweden have become new growth points in Europe. The rise in electricity prices has improved the economy of household energy storage, making its demand grow rapidly.
The conflict between Russia and Ukraine has further exacerbated the rise in commodity prices, which has greatly increased the power generation costs of gas and coal-fired power plants. It accounts for about 40% of Germany’s electricity production, leading to an increase in wholesale electricity prices.
In the past 12 months, the contracted electricity prices of German residents have increased by 48%. The rising cost of electricity will stimulate the demand for household energy storage.
Virtual power plants expand revenue and improve the economy of energy storage market in Australia
Australia has a good trend of developing household energy storage, and the energy storage market still has huge growth space in the future. Australia is a sparsely populated country, and power mainly depends on long-distance transmission.
Therefore, distributed energy has been greatly developed. Microgrid, energy storage and other technologies can improve the reliability of power consumption, reduce the load fluctuation of the power grid, and accelerate the promotion of Australia’s home battery system. It is increasingly important for the sustainable promotion of solar energy and decarbonization of the power grid, and also help to improve the long-term energy affordability and reliability.
According to statistics, 48 MW/134 MWh of new household energy storage capacity was installed in Australia in 2020. Australia has good conditions for the development of household energy storage, but it currently accounts for only 5% of the global energy storage market. There is huge room for development in the future.
The reasons for the development of household photovoltaic energy storage in Australia include:
● Light resources
The level of light resources in Australia ranks first in the world. More than 80% of the regions have light intensity exceeding 2000kW/m2/h, and the cost of photovoltaic power generation in Australia is only half of that in Germany under the same system cost.
● Policy support
The Australian government has adopted the Small-scale Renewable Energy Scheme, SRES), issue Small-scale Technology Certificates (STCs) to users who install household PV. High energy consumption users are also required to purchase a certain proportion of STCs and perform the obligations specified in RET. At the same time, Australian state governments give FiT subsidies to household PV;
● Housing ownership rate
The housing ownership rate and single family housing rate are high in Australia. The premise of installing the household photovoltaic system is to have an independent roof, so the apartments that live in a centralized way generally do not have the conditions to install the household photovoltaic storage system.
According to the data, the proportion of households living in independent or semi independent houses in the EU, the United States, Japan and Australia exceeds 50%. The housing structure dominated by independent houses is the premise for the large-scale development of household optical storage systems in these regions.
● Electricity prices
Electricity prices in Australia are rising. From the perspective of wholesale electricity price, as solar power generation enters the power market in a large area, the electricity price during the daytime photovoltaic power generation period drops, and the electricity price reaches the peak at night. Therefore, the assistance of energy storage is urgently needed to realize the time shift of electricity.
Australia is gradually establishing a virtual power plant mechanism to improve the profitability of energy storage. In 2018, the Liberal Party government of South Australia allocated AUD180 million for 40000 households to install small electrochemical energy storage and large electrochemical energy storage power plants, including virtual power plant.
In 2019, the Australian Renewable Energy Agency (ARENA) has committed to conduct a $2.46 million virtual power plant (VPP) integration test for the Australian Energy Market Operator (AEMO), aiming to demonstrate the VPP’s ability to provide energy and frequency control services. Household energy storage participates in the ancillary service market through aggregators.
According to the report released by AEMO, users can obtain nearly A $3000 from virtual power plants, with a payback period of 6.8 years. According to the number of households, the distributed photovoltaic installed capacity is calculated. Considering the penetration rate of household energy storage, the number of installed household energy storage can be obtained.
Assuming that the average installed capacity of each household can obtain the household energy storage installed capacity in the world and in each market, it is estimated that in 2025, the energy storage penetration rate of the newly installed photovoltaic market will be 15%, and the energy storage penetration rate of the stock market will be 2%.
The global household energy storage capacity space will reach 25.45GW/58.26GWh, and the combined growth rate of installed energy from 2021-2025 will be 58%.
What are the industrial barriers in the energy storage market
On the one hand, the household energy storage market is mainly concentrated in the United States, Europe and other countries and regions with high popularity of household photovoltaic and high household electricity charges. If products from other countries, such as China’s products, want to enter the relevant market, they usually need to arrange global distribution channels.
On the other hand, household energy storage products are usually used in conjunction with photovoltaic systems, and have certain attributes of consumer appliances, which can quickly reach downstream customers through a reasonable channel layout.
There are two kinds of channels in the American energy storage market: one is to focus on the stock market through distribution channels.
The products are sold to PV installers through distributors, and then sold to households that have installed household PV. The other channel is to focus on new energy storage market through builders. Builders will purchase products uniformly when building new houses.
There are various types of household energy storage products with a wide range of electrification. The household energy storage products can be divided into:
● Small battery system
● Low voltage modular battery system
● High voltage modular battery system
● AC coupled battery system
● Off grid battery system
● Multi in one solar cell system
The charging capacity of energy storage products varies from 5-500kwh, and users can select appropriate products according to household power demand. The core of energy storage system is safety, long life and low cost. The higher the charge of the energy storage system, the more complex the system and the greater the difficulty of integration.
Therefore, the company needs to have high R&D investment, strong technical reserves, and efficient, convenient, rich and reliable product delivery capabilities in the energy storage market. In addition, the company needs to provide a certain period of warranty for its products, usually 10 years.
Good product quality performance, low repair rate, and high safety evaluation are important factors that affect consumers’ choice and constitute industry brand barriers.