In recent decades, and particularly during the last decade, the residential energy storage and inverter market in the United Kingdom has been piggybacking on solar PV advances. “Storage is following in the footsteps of solar panels, which have become mainstream after relentless cost reductions,” said Iain Staffell, sustainable energy lecturer at Imperial College London. While Germany has led the European pack of countries adopting residential storage, other countries are following suit, and industry newcomer FoxESS has shifted its eyes to the U.K. market by setting up new local operations.
In 2019, analyst group Wood Mackenzie released its “Europe Residential Energy Storage Outlook 2019” report, in which it predicted a fivefold increase in residential storage capacity across Europe by 2024. Underpinning the impressive 500% growth projection, WoodMac expects Italy and Germany to achieve price competitiveness with economics in favor of residential storage by 2021 and 2022, respectively. But the analyst group also sees other European markets following suit with mass adoption.
The report projects that the residential U.K. storage market will stay on track with current installation volumes, and that it likely won’t achieve grid parity until 2024. However, expedited growth and favorable economic shifts could be in store. The U.K. government has ambitions to achieve net zero emissions by 2050, and this will undoubtedly require a significant uptake in storage. Residential storage economics could turn more favorable as electric rates continue to climb across markets, with increasing demand coming from EVs and growing electrification.
The EV sector is undoubtedly delivering scale to storage. “The number of EVs on Britain’s roads has grown 25% so far this year, sailing past quarter of a million,” said Staffell. There is no sign of this slowing down, either – the U.K. government has set policy insisting that by 2040, all new cars and vans sold in the U.K. should be zero-emissions capable. Toward this end, the government has challenged the industry and researchers to develop the next generation of batteries in the United Kingdom, with a £246 million fund allocated to the Faraday Battery Challenge.
EVs remain popular with the public. Last year’s YouGov survey, commissioned by insurance company Aviva, found that 56% of U.K. respondents would likely purchase an EV “if it was available at a price you would consider reasonable.” That caveat, “a price you would consider reasonable,” is the pivot upon which the EV market tilts.
Similar economic drivers inform stationary storage uptake in the United Kingdom. Ricky Singh, CEO of Evergen – one of the country’s leading solar+storage installers – noted that despite the absence of government subsidies in the residential market, the “cost of lithium-ion batteries has dropped dramatically as production has rocketed to meet demand.”
Prices have dropped significantly indeed. “In 2010, lithium-ion batteries cost around $1,160/kWh and in 2018, prices were about $300-350/kWh. Price reductions have continued since, although at a slower rate,” said Singh. Evergen estimates that prices will continue to fall to below $100/kWh by 2024, and even down to $55-$60/ kWh by 2030.
While economics have strengthened significantly for the expansion of rooftop solar paired with battery storage, the steep price plummets seem to have tailored off. “There is a sense … that the rate of these cost reductions has plateaued,” said Steven Wallace, procurement director for Project Better Energy, a U.K.-based renewable energy company consortium.
Heavily funded market entrant FoxESS is bringing an alternate offering to the solar+storage space, which could cut down costs. Developing both residential solar inverters and storage products, the newly established company says it has strong ambitions for market dominance. FoxESS is opening locations globally at speed, and has selected the United Kingdom as its European home. An offshoot of the world’s largest steel manufacturer, Tsingshan Holdings Group, the new company already appears to be receiving a warm welcome from U.K. industry.
Developers say that the new company’s solution could resolve some industry headaches. Hardware and software compatibility issues can accrue when two separate manufacturers of inverters and batteries are working independently. “This issue can also impact on after-sales service levels and the warranty process,” said Wallace. “Having a single point of contact is very attractive and will eliminate the disputes that can sometimes occur where systems comprise of inverters and batteries that are supplied by different manufacturers.”
Evergen’s Singh echoed the sentiment. “The industry has lacked a ‘chain of custody’ as regards product warranties,” he said in reference to the latest entrants to the U.K. market.
FoxESS represents a significant step change to the industry, in large thanks to its Tsingshan lineage – which uniquely boasts a complete vertically integrated production line from nickel mines and lithium battery materials down to batteries and packs. Wallace explained that a complete supply chain will offer multiple benefits, allowing for a more streamlined material procurement process, reduced manufacturing costs, and improved quality control.
“FoxESS, being the only vertically integrated player in this space has the advantage to take the price down further offering a shorter ROI, which will always increase customer uptake,” said Singh.
On the rebound
Growing investment in the sector – supported by promising policies, consumer motivation, and new business models – are all telling signs that the solar+storage market is priming for a healthy boost in the United Kingdom.
This comes as good news after a market slowdown. Falling installation costs were not enough to insulate the U.K. solar sector from the expiration of its feed-in tariff (FIT) program. That blow arrived in 2018, hitting both solar deployment and storage. The FIT ran from 2010 to 2019, enabling the deployment of more than 900,000 rooftop solar PV systems, significant cost reductions, and the rearing of the previously nascent residential energy storage market.
Thankfully, according to installers, the market has since recovered and looks poised for great gains in the new decade. “The future in U.K. solar and storage is the brightest it’s been in over five years,” said Singh.