Household energy storage is an integral part of the household power system under the energy revolution. The advantages of household energy storage systems include providing backup power to cope with grid outages, balancing energy supply and demand, improving self-sufficiency and reducing electricity bills.

Stimulated by multiple factors, the demand for household energy storage continues to be strong, and the global market is blooming in many places. The following will briefly analyze the household storage demand in regional markets such as Europe, the United States, Australia, South Africa, and Southeast Asia.

Global: Europe’s destocking growth slows down, while emerging markets take over and grow rapidly

From the perspective of the global market, the global household storage market will add 15.6GWh of installed capacity in 2022, a year-on-year increase of 136.4%, more than doubling the growth, and is expected to maintain a sustained rapid growth trend in the medium term.

As the global energy transformation strategy continues to advance, there is a time and space mismatch between power supply and demand. The aging of the power grid, local conflicts, extreme weather and other issues have exacerbated conflicts, driving the demand for household energy storage to increase. At the same time, governments of various countries have provided strong support for household energy storage, which has improved the economics of household energy storage. It is expected that the global installed capacity of household energy storage, with Europe and the United States as the main markets, will continue to maintain an upward trend.

Distribution of major global home energy storage application markets in 2022

household energy storage

Due to the superposition of multiple factors, household energy storage has become one of the most promising incremental markets.

Rising electricity prices: Due to the maturity of energy storage technology and falling costs, energy storage will begin to grow rapidly in 2021. In 2022, due to the year-by-year increase in energy costs and electricity prices in Europe, coupled with the Russian-Ukrainian war and large-scale overseas power outages, residential electricity costs will be high + power supply will be stable Poor performance has led to high growth in household photovoltaics, which in turn has led to an unexpected explosion in the household energy storage market.

Increased policy support: tax exemptions and financial subsidies provide policy support. As residents’ electricity prices continue to rise, the economics of household savings have improved. Countries around the world have launched relevant policies to encourage household energy storage installations. Relevant policies can be divided into indirect tax exemptions and direct financial subsidies, thereby reducing household storage installation costs; with the further implementation of policies led by carbon neutrality and energy independence goals, energy storage support policies are expected to continue or increase.

High-yield economic driver: With the trend of rising electricity prices for overseas residents, installing household storage for self-consumption can save more electricity expenses, and the household savings rate of return continues to increase, thus stimulating the continuous increase of household storage installed capacity.

In terms of installed capacity, Europe, the United States, Japan, and Australia are the world's most important household storage markets, with a total of approximately 60% of newly installed capacity in 2022. In 2022, Europe's newly installed household energy storage capacity will be 5.68GWh, accounting for 36.4% of the global market. In addition, emerging markets such as South Africa and Southeast Asia also have strong demand drivers for household savings. They have shown high growth over the past 23 years, which may provide new growth for the global household savings industry in the future. Next, let’s look at the situation in each major regional market.

Europe: Tight energy supply, high electricity prices + strong policies shape household savings economics

The European energy storage market is mainly driven by the demand for energy self-control and high economics. The European electricity spot market price is determined by energy supply and demand. In 2022, geopolitical conflicts disrupted European natural gas supply and European electricity prices soared. Amid high electricity prices and unstable supply, demand for household savings will surge in Europe in 2022.

In the European energy storage market, Germany and Italy occupy nearly 70% of the market. According to SolarEurope, the new installed capacity of household storage in Europe in 2021 is 2.29GWh, +106.8% year-on-year, and the cumulative installed capacity is 5.4GWh. In 2022, the top four newly installed household savings in Europe are Germany, Italy, the United Kingdom, and Austria. Among them, Germany is still the region with the highest installed household savings in Europe, accounting for 42%. The proportion of newly installed household savings in Italy has increased significantly, compared with 27 %.

Proportion of the top 5 countries in terms of new household savings capacity in Europe

household energy storage

Since the beginning of this year, electricity prices in European countries represented by Germany have fallen. The current electricity price has been restored to the 2021 level. The electricity price in Germany, Italy and the UK is around 0.4 euros/kWh, and household storage is still economical. In addition, the energy crisis has increased the determination of European countries to transform their energy sources. It is expected that the demand for new energy construction and energy storage facilities will continue. In order to achieve independent and controllable energy and achieve the long-term goal of carbon neutrality, many European countries have adopted various types of policies to encourage the development of household savings. With strong policy leverage, the economics of household savings in Europe has been further amplified.

The EU launched a "REPowerEU" energy plan in May 2022, which proposed increasing the renewable energy share target to 45% in 2030. In the interim agreement in 2023, the final target was set at 42.5%. Under the general framework decided by the European Union to ensure energy security and promote the development of renewable energy, European countries have actively adopted various types of policies such as government subsidies, tax exemptions, and financing support to promote the installation of new energy equipment. Among them, distributed installed capacity is an important component, bringing additional demand for household energy storage.

As the main country in energy storage construction in Europe, Germany has taken the lead and launched a combined attack to support household savings. Germany’s support for household savings originated earlier, using a combination of financing, taxation, subsidies and other policies.

At present, Germany has two latest main support policies for household storage: First, the "German Renewable Energy Law (EEG 2023)": for household solar energy storage, the remaining grid-connected electricity price has been increased, and the grid-connected subsidy can reach a maximum of 13.4 euros. points/kWh. The installed capacity limit for paying taxes and fees for household energy storage has been increased from 10kW to 30kW. The second is the 2022 Tax Bill: Germany exempts some of the income tax on the feed-in electricity price, exempts the import, purchase, and installation of small rooftop photovoltaic and energy storage systems from the 19% value-added tax, and simplifies the value-added tax exemption process. The two policies have reduced the payback cycle of household optical storage equipment by increasing electricity sales revenue and reducing system costs, thus improving the economics of household storage in Germany.

In 2023, as natural gas prices fall, residential electricity prices fall, and European dealers continue to destock, dragging down performance, and the market becomes worried about the actual demand in Europe. However, the actual installation rhythm of the European market in 2023 still shows a strong trend. According to statistics from ISEA&RWTH Aachen University, Germany's household storage installed capacity from January to August 2023 was 3.04GWh, +158.0% year-on-year. According to ANIE statistics, in the first quarter of 2023, Italy’s energy storage installed capacity was 1.09GWh, +296.0% year-on-year. We believe that the slowdown in shipments in 2023 is mainly due to the temporary impact of destocking.

The current return rate for energy storage is still relatively high. Considering that compared with 2021, the current product preparations are more diversified, the cost of raw materials such as batteries has begun to decline, and user education is more sufficient, European household storage still has high growth momentum. The European energy storage market is mainly driven by the demand for energy self-control and high economics. It is expected that shipments will return to rapid growth in 2024, and there is still a lot of room for improvement in the penetration rate of household storage in Europe.

United States: Preventing power outages and increasing policies to improve economic efficiency

The aging of the U.S. power grid in recent years has brought about demand for distribution and storage, and household photovoltaic storage has become the second source of electricity for households. The underlying driving factor for the demand for household savings in the United States is that the US power grid is aging and power outages are prone to occur during severe weather. At the same time, the latest ITC and NEM3.0 policies in the United States are increasing the economics of household savings. In addition, the structure of houses in the United States is mainly single-family, with ample roof area, giving sufficient space to release the demand for household savings, and the growth of household savings can be expected in the future.

According to reports from CNBC and the Energy Bureau, most of the power grid in the United States was built in the 1960s and 1970s, and more than 70% of the transmission system is more than 25 years old. When operating at high load or when the external environment is under pressure, the power grid is prone to short circuits and other conditions. , causing a power outage.

According to EIA statistics, each user in the United States will experience power outages for more than 7 hours in 2021, of which power outages due to weather conditions last for more than 5 hours. According to DOE statistics, there will be 390 power outages in the United States in 2022 and 167 power outages in the first half of 2023. According to NOAA, as of the end of August 2023, there have been 23 severe meteorological disasters in the United States this year that caused a single impact of more than US$1 billion, exceeding the record set in the entire year of 2020 (22). Frequent power outages due to aging power grids and weather conditions have led American household users to seek the protection of photovoltaic and energy storage facilities.

On August 16, 2022, Biden signed the Inflation Reduction Act (IRA) worth a total of US$750 billion, which will be officially implemented in 2023. The IRA extends the ITC time limit to 2035. For the first time in IRA, independent energy storage is included in the scope of tax deductions, clarifying that independent energy storage greater than 3kWh can also apply for ITC deductions. The IRA subsidy time and scope for ITC have been relaxed, which has reduced early concerns about subsidy fading. The initial construction cost of U.S. energy storage has dropped significantly, supporting demand.

Newly installed capacity in the U.S. energy storage market by scenario

household energy storage

According to Wood Mackenzie, the newly installed capacity of energy storage in the United States in 2022 will be 4.80GW/12.18GWh, +34.2%/11.8% year-on-year. Among them, the newly installed capacity of grid-level/household/industrial and commercial energy storage accounts for 86%/11%/3% respectively in terms of energy capacity. The projects are mainly large-scale storage in front of the meter, and household storage maintains steady growth. In 2022, the United States added 631MW/1537MWh of household storage capacity, +45%/36% year-on-year; in 23Q1 it was 155.4MW/388.2MWh, +7%/+36% year-on-year. With the demand for backup power and increasing policies, we are optimistic that the household storage market in the United States will continue to grow rapidly.

Australia: The ratio of storage/solar assembly has increased sharply, and household storage has become economical

Driven by high electricity prices and incentive policies, Australian household savings have become economically viable. Australia has a high cumulative installed capacity of distributed photovoltaics. On this basis, the ratio of energy storage to photovoltaic installations will grow rapidly in 2022, mainly due to the significant improvement in the economics of household storage due to rising energy prices and federal solar and energy storage incentives. Australia's household savings market will develop rapidly in 2022. According to SunWiz statistics, the Australian household storage market will achieve 47,100 new installed units in 2022, with an installed capacity of 589MVh, a year-on-year increase of 55.72%/76.88% respectively.

Adequate lighting conditions and favorable policy environment have supported the rapid growth of distributed photovoltaics in Australia. It is reported that Australia's lighting resources rank first in the world. At the same time, Australian photovoltaic equipment can produce more electricity and the cost of photovoltaic power generation per unit is lower. At the same time, the government provides FIT subsidies for household photovoltaics. Under the dual favorable conditions of light factors and policy factors, the cumulative installed capacity of household photovoltaics in Australia is high.

The high growth of household photovoltaic installed capacity provides the foundation for household storage installation. At the same time, the proportion of photovoltaic assembly reaches a record high, which is the main source of the growth of household storage installed capacity. According to Sunwiz statistics, a total of 47,100 small energy storage units were installed in 2022, and the converted number of new energy storage units/photovoltaic units in that year was about 15.0%, +7.0pct year-on-year. According to Australia Energy Council statistics, there were 21,700 small photovoltaic equipment equipped with storage in 2022, accounting for approximately 46.0% of the total installed energy storage capacity. That is, the proportion of original photovoltaic equipment allocated and stored was approximately 54.0%, accounting for approximately half of each.

Australia’s allocation of reserves

household energy storage

According to statistics from the Australian Energy Regulator (NER), the spot price of electricity in mainland Australia reached a peak in the second quarter of 2022, mainly due to the sharp rise in energy prices due to geopolitical conflicts and the continuous shutdown of coal power plants on Australia's east coast due to La Niña-driven rainfall. Affected by other incidents, coal and natural gas supplies are in short supply. Due to rising wholesale prices caused by inflation, geopolitical conflicts and aging power plants, electricity prices may remain on an upward trajectory in the second half of the year. According to AER, starting from July 1, 2023, electricity prices are expected to increase by 20% to 25% year-on-year. The main impact will be on household users and small traders, which may directly stimulate the demand for household energy storage installations.

Many states in Australia provide subsidies for household storage systems to reduce installation costs. Most of the policies used by Australian states include directly providing purchase rebates or providing zero-interest loans to homeowners to purchase energy storage equipment. With the support of subsidy projects, it is more feasible and economical for households to install household storage systems, and the number of household storage installations has increased rapidly in the past few years.

South Africa: The power supply has seriously deteriorated, and electricity needs self-distribution and storage.

The electricity shortage has had a serious impact on residents' lives, and South African households have chosen to proactively distribute and store electricity to ensure electricity consumption. Unlike Europe and the United States, the development of household savings in South Africa mainly comes from the spontaneity of households and is less affected by policy drivers. South Africa's traditional power supply is a seller's market under a high degree of monopoly. It is affected by multiple adverse factors and the power shortage problem is difficult to solve in the short term.

According to Eskom's annual report, South Africa will have more than 200 days of power cuts throughout 2022, with power outages lasting up to 1,900 hours. The situation has further deteriorated so far in 2023, and South Africa's power crisis has entered a "disaster state". Distribution and storage are an important and effective way to ensure power consumption. In the face of frequent power outages, South African households proactively use photovoltaic and storage equipment to seek power security.

The government's renewable energy incentive policies have achieved significant results, and domestic inverter exports have jumped significantly. The energy crisis has been superimposed and under pressure from developed countries, the government has actively promoted low-carbon transformation and renewable energy investment.

In July 2022, the South African government announced that it would exempt all embedded power generation (distributed self-generation) licenses and introduce a feed-in tariff (FiT) mechanism for rooftop solar to incentivize solar module owners to sell excess power to the grid.

In February 2023, the government announced a photovoltaic tax subsidy of up to 4 billion rand (approximately US$210 million). Household users who install rooftop photovoltaics can apply for a 25% tax rebate on the purchase cost of solar panels. The two policies have played a significant stimulating role. When the corresponding policies were introduced, China's exports of South African inverters saw two significant jumps.

With policy stimulus coupled with the power crisis, the growth of South Africa's household savings market is expected to be sustainable. In order to alleviate the power crisis, the South African government announced that national electricity prices will increase by 18.56% and 12.74% respectively in 2023 and 2024, in order to curb residential electricity demand.

South Africa Energy Storage Market Forecast (2020-2030)

household energy storage

Judging from the latest data in 2023, China's exports of inverters to South Africa from January to July 2023 totaled 3.108 billion yuan, +487.7% year-on-year; the average price was 2,152.0 yuan/unit, +105.6% year-on-year from January to July 2022. China The price and volume of inverters exported to South Africa increased. Considering that South Africa is also following the global pace and gradually getting rid of its dependence on coal power generation, the large-scale construction of coal-fired power stations is blocked, and the power problem cannot be solved in the short term, it is expected that the high growth rate of the South African energy storage market will be relatively sustainable.

Southeast Asia: Fragile power grid + extreme weather trigger power consumption contradictions

Under a fragile power grid, extreme weather intensifies power consumption conflicts, and the energy storage market is growing rapidly. The overall power facilities in Southeast Asia are fragile, and the power grids in some archipelago countries are mainly off-grid. In addition, island residents are scattered and overhead lines are poorly regulated. The overall power grid situation is more suitable for the development of distributed rooftop photovoltaic energy storage.

According to the established policies of the ten countries in the ASEAN region, three-quarters of the growth demand will be met by fossil fuels, resulting in a 35% increase in carbon dioxide emissions. At present, Southeast Asia is still dominated by coal-fired power supply, and the energy storage market in Southeast Asia is still in its early stages of development. According to incomplete statistics, among the new new energy storage projects put into operation in the world in 2022, the Southeast Asian market will account for 2% of the global market, which is a small proportion, but demand will grow rapidly in 2023. The main energy storage markets in Southeast Asia include Malaysia, Singapore, Vietnam, Philippines, Indonesia, etc.

In 2023, the amount of China's inverter exports to Southeast Asia increased significantly. Market demand has increased significantly in 2023. From the perspective of inverter export volume, from January to July 2023, China exported a total of 1.680 billion yuan of inverters to Southeast Asia, +86.7% year-on-year. In terms of countries, China's main inverter exporting countries in Southeast Asia are Thailand, Malaysia, and the Philippines. The export value from January to July accounted for 33.7%/17.6%/14.4% of the total Southeast Asia export value respectively.

China’s monthly inverter export volume to Southeast Asia (million yuan) and price

household energy storage

Under the influence of El Niño climate, Southeast Asia is in a deep power shortage crisis. Countries such as Thailand and the Philippines, which mainly rely on diesel, natural gas, coal and other fuels for power generation, have also experienced large-scale power cuts and blackouts due to insufficient supply of power generation fuels, which have seriously affected residents' lives and production activities. Southeast Asia's power grid is regionally mismatched, incompletely developed, and its population is dispersed, which is not conducive to centralized power supply. Distributed household optical storage is more suitable for local needs in Southeast Asia.

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