What affects home battery storage cost-the demand analysis and industrial chain pattern
Analysis of home battery storage demand
The home battery storage demand is one of the important factors closely affect the home battery storage cost. Due to the maturity of energy storage technology and the decline of home battery storage cost, energy storage will start to grow at a high speed in 2021.
In 2022, due to the annual increase of European energy costs and electricity prices, the Russian Ukrainian war and large-scale power outages, the high cost of residential electricity+poor stability of power supply will lead to the high growth of household photovoltaic, and then the unexpected outbreak of household energy storage market. Household storage has entered a new stage of explosion.
In 2021, the world’s newly added household storage capacity will be 1.9GW/4.4GWh, an increase of 53%/56%, accounting for about 20%. The global household storage is booming and the home battery storage cost is fluctuates.
The cost of electricity is high and continues to rise
Under the energy crisis, the cost of electricity continues to rise, which also affects the home battery storage cost. In recent years, the electricity prices in Europe and the United States have been rising year by year.
Affected by the Russian Ukrainian conflict and other events, the cost of natural gas has soared, and the cost of electricity prices has risen rapidly in the short term.The average price in the European spot market has risen from about 50 euros/MWh at the end of 2019 to more than 300 euros/MWh at the highest.
The electricity prices in European countries in May 2022 have increased by 100-330% compared with the beginning of 2021. It is predicted that in 2022, the basic energy price of European economies such as France, Germany, Belgium and the Netherlands will remain at a high level of more than 150-170 euros/MWh. The per capita power consumption of Canada, the United States, South Korea and other countries far exceeds that of China.
The annual per capita power consumption of the major household storage countries, the United States, Germany and Australia, will be 12235/9857/6771KWh respectively in 2020, far exceeding the per capita power consumption of 5297KWh in China. With the continuous rise of electricity prices, the demand of European and American countries for self used renewable energy and energy storage has grown rapidly.
Weak power grid coordination capability and insufficient power supply reliability
Affected by extreme weather and weak power grid coordination ability, the stability of residential power supply in European and American countries is poor. This also has a certain impact on the home battery storage cost. Household storage can provide emergency power supply in case of power plant accidents or extreme natural disasters to improve the stability of power consumption.
In recent years, various large-scale power outages have occurred. According to statistics, the average power outage duration per customer in the United States in 2020 is up to 492 hours, including 373 hours caused by severe weather and emergencies. In 2022, a power plant accident will occur in Taiwan, China, affecting 5.49 million households and losing 10.5 million kilowatts, accounting for about 1/3 of Taiwan’s electricity.
Support policies such as tax relief have been gradually implemented
Countries have introduced policies such as tax relief or direct subsidies to promote development. The relevant policies can be divided into two categories. One is to implement tax relief. For example, Italy will increase the tax relief on household storage equipment to 110%. The United States will provide up to 30% investment tax relief for residential energy storage systems higher than 5kWh by 2026.
The other is the implementation of financial subsidies. For example, Japan provides 66% of the cost subsidies for households and businesses that install lithium electronic batteries, and the German state of Bavaria provides 500 euros (550 dollars) for each energy storage system with a capacity of more than 3kWh.
High rate of return on household savings
The rate of return on household savings, which is another factor in the home battery storage cost, is relatively high. It can reach more than 15% without considering subsidies, and the payback period is within 6-9 years. Germany, the United States and other countries in the forefront of global household energy storage development have higher profitability due to their high electricity prices.
Taking Germany as an example, if the scale is 5KW, the allocation and storage are 50% * 2h, the cost of household PV and the home battery storage cost is 2.06 euro/W, and the IRR is 22.55% after the retail price of 0.4 euro/KWh and the on grid price of 0.06 euro/KWh are calculated.
Taking California as another example, if the scale is 5KW, the allocation and storage is 30% * 4h, and the cost of household photovoltaic+energy storage is 4.63/W, the IRR will reach 18.9% after the peak price of 0.6/KWh and the average electricity price of 0.23/KWh are calculated.
With the decrease of system cost and the increase of electricity price, the IRR will further increase, and the high yield and short payback period will stimulate the rapid development of household storage.
On grid electricity price is lower than electricity price
The electricity price policy of grid connected household photovoltaic is gradually shifted to self consumption, promoting residents to configure energy storage on the basis of photovoltaic. At present, the grid connected household photovoltaic power price mainly includes three types of policies: on grid tariff policy (FiT), net metering and self consumption.
In Germany, Japan, Australia and other countries, the FiT subsidy price has been declining in recent years. In the past 15 years, Germany’s FiT surplus power grid price has declined by more than 80%. Japan’s household photovoltaic FiT will expire in turn from November 2019, and the subsidy price after the expiration will be significantly reduced.
At present, some states in the United States have terminated the net measurement plan, and the Netherlands, Italy and other countries will also withdraw from the net measurement policy. Under the self consumption mode in Germany, the on grid electricity price is only 0.06 euro/kwh, while the self use part is equivalent to the profit of 0.4 euro/kwh.
Therefore, self use after allocation and storage can improve the profitability and the home battery storage cost is lower. While FiT and net measurement policies are gradually declining, the self consumption policy is gradually promoted, and the economy of residents’ light+storage layout continues to improve.
First, the gap between the cost of light storage LCOE and home battery storage is widened, and the household light storage economy is highlighted. The storage economy and home battery storage cost are closely connected.
The data shows that in 2021, the average cost per kilowatt hour (LCOE) of photovoltaic+energy storage equipment in Germany will be 14.7 euro cents/kWh, close to 1/2 of household electricity price in the same period, and the LCOE difference will be 17.2 euro cents/kWh.It is expected that the price difference between the two will continue to widen gradually in the future.
By 2023, the LCOE of light+storage is expected to decline to 12.8 euro cents/kWh, and the LCOE gap with household electricity price in the same period will increase to 18.9 euro cents/kWh, further highlighting the economy of household light storage.What will affect home battery storage cost? Assuming that the system is composed of 5kW inverter and 10kWh energy storage battery, the selling price of the system is the sum of inverter, battery, components and installation costs, totaling 66000 RMB ≈ 10000 euros.
Assuming that only 10kWh/day is considered for self use and Internet access is not considered, 4 euros of electricity will be saved every day, with a payback period of 6-9 years. If the subsidy factor is considered, the investment cycle can be further shortened to 2-3 years.
Second, the new installed capacity of global household storage has maintained a high growth rate of more than 50% in the past few years.The growth rate of new installed capacity of global household storage also has a great impact on the home battery storage cost. In 2021, the scale of newly added household storage capacity in the world will be 1.91GW/4.36GWh, an increase of 56% in MWh.
Currently, household energy storage is mainly concentrated in countries or regions with high electricity prices. In 2020, global household energy storage will be mainly concentrated in European countries such as Germany, Italy and the United Kingdom, as well as other countries such as Japan, Australia and the United States. Among them, household energy storage in Germany, the United States, Japan and Australia accounted for 74.8%.
The global household storage penetration rate is expected to accelerate. It is expected that the household storage penetration rate will reach 28% by 2025, of which the United States and Europe are the two most important growth points. It is expected that the household storage penetration rate in the United States is expected to increase from 8% in 2021 to 36% in 2025, and that in Europe is expected to increase from 8% in 2021 to 56% in 2025.
The installed capacity of global household energy storage is expected to reach 50GW/122.2GWh in 2025, and the household energy storage in the United States and Europe will grow rapidly. It is expected that household energy storage will enjoy a high growth rate.
By 2025, the installed capacity of global household energy storage is expected to reach 50GW/122.2GWh, CAGR will reach 126%/130% in 2021-2025, global household energy storage will ship 80GW/195.5GWh in 2025, and CAGR will reach 126%/130% in 2021-2025.
The installed capacity of household energy storage in the United States and Europe is 18.2/73.1GWh respectively, and the CAGR in the United States and Europe is 112% and 145% respectively from 2021 to 2025. The situation may cause the home battery storage cost to change.
Industrial chain pattern of home battery storage
To analyze home battery storage cost, it is necessary to discuss the industrial chain pattern of home battery storage. The core of household energy storage is energy storage battery and energy storage inverter. Its barriers lie in the adaptation of the battery and energy storage inverter at the production end and the brand channel of the terminal. The core competition for profit lies in the product and market structure of energy storage.
The Chinese manufacturers of global energy storage cells take the lead in shipping, which causes the home battery storage cost to change. Some of them can be shown in the top 25 energy storage companies in China in 2022. CATL’s shipping volume ranks first in the world. It is estimated that in 2021, the global energy storage cell shipment will be 59.9GWh, of which CATL, as the largest cell supplier, will take the lead, with the shipment volume of 16.7GWh, accounting for 27.9%.
As the leader of household storage, Pylon Tech shipped 1.5GWh, accounting for 2.6%. It is estimated that the global shipment in 2022 will be 114.9GWh, an increase of 91.9%, of which the CATL shipment will be 45.0GWh, an increase of 169.5%; Pylon Tech shipped 3.5GWh, an increase of 127.3%.
Home energy storage suppliers show obvious geographical distribution characteristics. Tesla is mainly supplied to the American market, while Pylon Tech is deeply involved in the European market. According to S&P Global, in 2021, the top 3 suppliers of household energy storage was Tesla, Pylon Tech and BYD, accounting for 18%, 14% and 11% respectively.
Among them, the largest supplier in the German market is BYD, accounting for 26%, followed by local integrators such as Senec and E3/DC; Pylon Tech has the highest proportion in Italian market, accounting for 23%; The US market is dominated by Tesla, accounting for 55%; The Japanese market is mostly supplied by local brands.
Energy storage pattern
Energy storage pattern is an important factor in home battery storage cost. It is estimated that 117.2/182.1GWh of global energy storage cores will be shipped from 2022 to 2023, an increase of 93%/55%; Among them, CATL occupies the first place. It is estimated that CATL will ship 45.0/67.5GWh from 2022 to 2023, an increase of 169%/50%, accounting for 38.4%/37.1%.
It is necessary to analyze the inverter pattern of household storage in order to further discuss the home battery storage cost. The household storage inverter pattern is relatively centralized, and the competition among manufacturers is fierce, with CR5 accounting for about 58%.In 2021, the global consumer side energy storage inverter market competition pattern will be more concentrated, but the competition among manufacturers will be fierce.
Growatt ranks first with a market share of about 13.8%, followed by Deye, Solis, Solaridge and Goowde, with 12.4%, 10.9%, 10.3% and 9.8% respectively. There are lots of great manufacturers do well in the field of energy storage, which can be shown in the top 10 energy storage battery manufacturers in the world in 2022.The top five cities have a small difference in their market share, with CR5 accounting for about 58%.
Energy storage and shipment of leading inverter manufacturers are growing rapidly. Since the beginning of 2022, household storage demand has been strong, and the shipments of Chinese inverter manufacturers have continued to increase rapidly, which greatly affects the home battery storage cost.
It is estimated that the shipments of Chinese inverter manufacturers will more than double in 2022, and the shipments of Sunshine will be 6-7GWh in 2022, which is expected to double, with household storage expected to increase from 10000 sets in 2021 to 100000 sets; Solis shipped 300000 sets, achieving 9-10 times growth; Goodwe shipped 300000 units, a 4-5 fold increase, and Deye shipped 200000 units, a 2-3 fold increase.