Due to the maturity of energy storage technology and the decrease in cost, energy storage will start to grow rapidly in 2021. In 2022, due to the rising energy cost and electricity prices in Europe year by year, combined with the Russia-Ukraine war and large overseas power outages, high residential electricity costs and poor power supply stability will bring a high increase in household photovoltaic, which will bring the outbreak of the household energy storage market beyond expectations. Household storage has entered a new stage of an outbreak. In 2021, the installed capacity of newly added household storage in the world will be 1.9GW/4.4GWh, an increase of 53%/56%, accounting for about 20%. Global household storage is booming.
- The cost of electricity is high and rising continuously
Under the energy crisis, overseas electricity costs are rising. In recent years, the price of electricity in European and American countries has been rising year by year, and affected by Russia-Ukraine conflict and other events, the cost of natural gas has soared, and the price of electricity has risen rapidly in a short term. The average price of spot market in Europe has risen from about 50 euros /MWh at the end of 2019 to more than 300 euros /MWh at the highest. Across Europe, electricity prices in May 2022 are 100-330% higher than at the start of 2021. According to ING, basic energy prices in European economies such as France, Germany, Belgium and the Netherlands will remain high at around 150-170 euros /MWh throughout 2022.
Per capita electricity consumption is much higher overseas than at home. The per capita electricity consumption of overseas countries such as Canada, the United States and South Korea is far higher than that of China. The annual per capita electricity consumption of major household storage countries such as the United States, Germany and Australia is 12235/9857/6771KWh in 2020, far higher than that of China, which is 5297KWh per capita. As electricity prices continue to rise, overseas demand for self-generated renewable energy and storage is growing rapidly.
2 Weak coordination ability of the power grid and insufficient power supply reliability
Overseas affected by extreme weather and weak power grid coordination ability, the stability of residential power supply is poor. Household storage can provide emergency power in power plant accidents or extreme natural disasters to improve power stability.
In recent years, various large-scale power outages occurred overseas. According to the EIA, the average customer in the United States was without power for 492 hours in 2020, with 373 hours due to major events such as severe weather and emergencies. In 2022, a power plant accident in Taiwan, China, affected 5.49 million households and lost 10.5 million kW, accounting for about one third of the total power of Taiwan.
- Tax relief and other supporting policies are gradually implemented
Overseas countries have introduced policies such as tax breaks or direct subsidies to promote development. Relevant policies can be divided into two categories. One is the implementation of relevant tax relief. For example, Italy has increased the tax relief of home storage equipment to 110%, and the United States will grant up to 30% investment tax relief for energy storage systems higher than 5kWh by 2026. The other is financial subsidies, such as Japan's 66% subsidy for the cost of installing lithium-ion batteries for households and businesses, and Germany's Bavaria's €500 ($550) subsidy for each storage system with a capacity of 3kWh or more.
- High yield
The rate of return of household reserve is high, and the rate of return can reach more than 15% without considering subsidies. The payback period is within 6-9 years. Germany, the United States and other countries in the forefront of the development of household energy storage have higher yields due to their high electricity prices.
Taking Germany as an example, assuming that the scale is 5KW and the allocation storage is 50%*2h, the cost of photovoltaic + energy storage for household use is 2.06 euros /W, and the IRR reaches 22.55% after calculating with the retail electricity price of 0.4 euros /KWh and the feed-in electricity price of 0.06 euros /KWh.
Take California as an example, assuming that the scale is 5KW and the distribution storage is 30%*4h, the cost of photovoltaic + energy storage for household use is 4.63 USD /W, and the IRR reaches 18.9% after calculating the peak electricity price of 0.6 USD /KWh and the average electricity price of 0.23 USD /KWh. With the decrease of system cost and the rise of electricity prices, the IRR will further increase. Overseas high yield and short payback periods stimulate the rapid development of household savings.
5 The feed-in price is lower than the electricity price
The policy of photovoltaic electricity prices for grid-connected households has gradually shifted to self-consumption, and residents are encouraged to allocate energy storage on the basis of photovoltaic.
At present, there are three kinds of photovoltaic electricity prices for grid-connected households: feed-in tariff policy (FiT), net metering and self-consumption. In Germany, Japan, Australia and other countries, FiT subsidy prices have been declining in recent years. In Germany, the feed-in price of surplus FiT electricity has decreased by more than 80% in the past 15 years. In Japan, photovoltaic FiT for household use will expire successively in November 2019, and the subsidy price will be significantly reduced after the expiration. At present, some states in the United States have terminated the net metering program, the Netherlands, Italy and other countries will also withdraw from the net metering policy. Under the German self-consumption model, the on-grid electricity price is only 0.06 euros /kwh, while the part of self-use is equivalent to the profit of 0.4 euros /kwh at the electricity price. Therefore, self-use can improve the return rate after the distribution of storage. While the FiT and net metering policies gradually decline, the self-consumption policy is gradually promoted, and the economy of residents' distribution light + storage continues to improve.
The gap between the cost of light storage and household electricity is widening, and the economy of household light storage is prominent. According to SPE, the average kilowatt-hour cost (LCOE) of PV + energy storage equipment in Germany in 2021 was 14.7 euro cents /kWh, nearly half of the household electricity price in the same period, and the LCOE difference was 17.2 euro cents /kWh. We predict that the price difference between the two will gradually increase 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 will increase to 18.9 euro cents /kWh in the same period, and the economy of household light storage will be further highlighted.
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, 66,000 yuan ≈ 10,000 Euros. Assuming that only 10kWh/ day is considered for self-use, and Internet access is not considered, the daily electricity cost can be saved by 4 euros, and the payback period is 6-9 years. If subsidies are taken into account, the investment period can be further shortened to 2-3 years.
The newly installed capacity of global household storage has maintained a high growth rate of more than 50% in the past few years.
In 2021, the installed capacity of new households in the world will be 1.91GW/4.36GWh, an increase of 56% with MWh caliber. At present, the energy storage used by households is mainly concentrated in countries or regions with high electricity prices. In 2020, the energy storage used by households in the world will be mainly concentrated in European countries such as Germany, Italy, the United Kingdom, and other countries such as Japan, Australia and the United States. Germany, the United States, Japan and Australia together account for 74.8% of the total.
The permeability of household energy storage is expected to continue to increase. Global household storage penetration is expected to accelerate, reaching 28% by 2025. The US and Europe are the two most important growth areas. We expect the US to increase from 8% in 2021 to 36% in 2025, and Europe from 8% in 2021 to 56% in 2025.
The global installed household energy storage capacity is expected to reach 50GW/122.2GWh in 2025, with the rapid growth of household energy storage in the US and Europe. It is expected that the installed capacity of household energy storage will reach 50GW/122.2GWh by 2025, with a CAGR of 126%/130% from 2021 to 2025, and the global shipment of household energy storage in 2025 will reach 80GW/195.5GWh. CAGR reached 126%/130% in 2021-2025. The installed energy storage capacity of households in the US and Europe is 18.2/73.1GWh respectively, and the CAGR of the US and Europe from 2021 to 2025 is 112% and 145% respectively.