In its latest Energy Storage in PV Report, IHS notes that the residential PV market has disappointed in recent years in what are set to be key storage markets, largely due to the weak performance of the residential PV market in key countries including Italy, Germany and the UK. High battery and the required power-conversion electronics costs have also proven limiting factors.
However IHS reports that in 2015 the battery market is set to pick up, due to the, huge progress in overcoming many barriers. IHS predicts lithium ion battery prices will fall by 15% in 2015, on top of the 20% fall in 2014. Cost reductions and improving subsidy environments for storage will see 90% market growth for the residential battery sector in 2015, IHS predicts.
The principal driver of residential battery adoption will be the increasing attractiveness of the self-consumption of PV electricity. Storing electricity on-site for later use, rather than feeding it back into the grid, is the model under which PV+storage is most likely to make sense for homeowners IHS concludes.
The three key variables that determine whether its economical to add energy storage to a residential PV system to increase self-consumption are the value of the FIT, the expense of buying electricity from the grid, and the cost of energy storage products. And all of these metrics are moving in the right direction, Wilkinson commented. Although the high cost of batteries means that today in Germany, PV systems without storage offer a greater return on investment than PV systems with storage, IHS predicts that each of these key parameters will have moved to such an extent that this situation will be reversed by 2016.
pv magazine analysis, performed earlier this year and published in the August edition of pv magazine along with a market overview of residential storage systems available in Germany, came to similar conclusion. The analysis revealed that even with the capital subsidy currently being offered by the German government to homeowners looking to install solar, the financials still dont stack up. Naturally, this wont dissuade early adopter households, however rapidly falling battery and power electronics costs are likely to be a much more significant driver of deployment.
Regional battery markets
IHS concludes that the key self-consumption markets include Italy, Germany, the UK and Australia. The analysts predict that together these markets will account for 40% of the residential storage market by 2018. Together the countries only account for 20% of total PV installations, however relatively PV penetration levels exist in all four markets.
Italy in particular has high levels of solar penetration, with BNEF analyst Jenny Chase telling pv magazine that solar is presently generating 8% of the countrys electricity needs.
Both of those countries [Germany and Italy] are starting to approach to the technical limits to how much PV you can have in a major country, said Chase. About 8% of the electricity generated by Italy last year came from PV and thats higher than any major economy has ever done before. And if the Italian grids arent doing much about it yet, it is because they have bigger problems.
The IHS analysis of the geographic opportunities for residential grid-tied storage aligns with the strategy being rolled out by microinverter supplier Enphase, with its recently unveiled AC Battery. Enphase told pv magazine that it will initially target the U.S. states California and Hawaii, the Australian state of Queensland and Germany. Queensland and Hawaii are interesting market examples because of the high level of PV penetration currently on grids.
Japan is also predicted to become a major residential storage market. IHS predicts Japan to account for more than 200 MW of small-scale storage applications in 2018 making it the largest market by country. The driver in the Japanese market will be as backup power, due to frequent energy blackouts and the significant difference between peak and off-peak electricity prices, writes IHS. High solar FITs provide somewhat of a break on this demand.
In North America backup demand will be the primary driver for storage, delivering 5% of the global market by 2018 making it one of the major markets. However, this demand for backup power in North America and Japan remains somewhat of an anomaly concludes IHS.
Electricity blackouts are relatively uncommon in established PV markets and present little more than an inconvenience in the residential sector, Wilkinson said. As a result, only a relatively small market will exist where this is the main driver.