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Since 2021, the European market has been affected by rising energy prices, the price of residential electricity has risen rapidly, and the economy of energy storage has been reflected, and the market is booming. Looking back to 2022, the conflict between Russia and Ukraine has exacerbated energy anxiety.
Driven by the sense of crisis, the demand for home energy storage will continue to grow. Looking forward to 2023, the global energy transformation is the general trend, and household energy self-use is the main way. The global electricity price has entered a rising channel, the economy of household energy storage has been realized, and the market space will continue to grow in the future.
1. European energy crisis leads to rapid growth of home energy storage
Most household energy storage is used in conjunction with household distributed photovoltaics. In 2015, the annual installed capacity of global household energy storage was only about 200MW. Since 2017, the growth of global installed capacity has been relatively obvious, and the annual increase in newly installed capacity has increased significantly. By 2020, the global newly installed capacity will reach 1.2GW, a year-on-year increase of 30%. In 2021, the European market will be affected by the rise in energy prices, and the price of electricity for residents will rise rapidly. The economics of energy storage will be reflected, and the market will be booming.
Taking Germany as an example, 145,000 sets of household photovoltaics will be added in 2021, with an installed capacity of 1.268GWh, a year-on-year increase of +49%. The reason for the rapid growth of household energy storage in Europe in 2022 comes from the demand for energy independence under the influence of the Russia-Ukraine conflict and the rise in electricity prices has improved the economics of household energy storage. Excessive dependence on foreign energy has brought about an energy crisis, and the conflict between Russia and Ukraine has exacerbated energy anxiety. In Europe's energy structure, fossil energy accounts for a high proportion, and natural gas accounts for about 25%.
Moreover, natural gas is highly dependent on foreign countries, and about 80% comes from imported pipelines and liquefied natural gas. Among them, pipeline gas imported from Russia was 13 billion cubic feet per day, accounting for 29% of the total supply. Due to geopolitical conflicts, Russia has stopped supplying natural gas to Europe, threatening energy supply in Europe. In order to reduce energy dependence on Russia and maintain energy security, European governments have introduced policies to develop clean energy and accelerate the pace of energy transformation to ensure energy supply.
2. The policy side accelerates the energy transition
On May 18, the European Commission passed the REPowerEU proposal, raising the renewable energy target from the previous 40% to 45% in 2030. At the same time, the photovoltaic installation target was raised again. In 2025, the cumulative installed capacity of photovoltaics in the European Union will exceed 320GW, doubling the installed capacity by the end of 2021, and the cumulative installed capacity target will be about 600GW by the end of 2030, twice the current installed capacity. In addition, the document also proposes to gradually mandate the installation of photovoltaics on new residential and industrial and commercial buildings.
3. Rising electricity prices boost economics of home energy storage
The Russia-Ukraine conflict has further exacerbated the rise in commodity prices, which has made electricity from gas-fired and coal-fired power plants, which account for about 40 percent of Germany's electricity production, much more expensive, leading to higher wholesale electricity prices. In November this year, it rose by 67% compared with November last year, and the contract electricity price of German residents rose by 48%.
Rising electricity costs will create demand for household energy storage. Taking Germany as an example, it is assumed that the annual household electricity consumption is 4000kwh, and the electricity consumption at night is 60%. The annual photovoltaic power generation hours are 1000 hours, the photovoltaic investment cost is 1.3 euros/w, the energy storage investment cost is 0.8 euros/wh, and the residential electricity price is 0.3464 euros/kwh. Assuming a 4kw/8kwh energy storage system is installed, according to calculations, the higher the electricity price, the shorter the payback period.
4. Demand growth driven by a sense of crisis and economic stimulus
The global energy transition is the general trend, and household energy self-use will be the main way. The excessive dependence on fossil energy in the energy structure has caused the energy crisis in Europe. In order to maintain national security, Europe has accelerated the process of energy transformation. The best way is to replace energy supply with renewable energy power generation.
From the perspective of grid stability, the pressure on the grid brought about by the large-scale new energy grid connection is the cause, and the government guides power generation/users to configure energy storage through subsidies and other policies is the result. The underlying logic of European countries' subsidies for distributed photovoltaic and energy storage is to reduce the pressure of grid distribution and sales through distributed pv system. Therefore, the European household photovoltaic energy storage market will maintain a high growth rate.
5. The economics of household energy storage are clear
Residential electricity prices are mainly composed of energy costs, grid access fees, and related taxes and fees, of which energy costs only account for 1/3 of the terminal electricity cost. Energy prices have risen this year, leading to an increase in electricity prices. Residential electricity prices adopt the annual package method, and there is a certain lag in the transmission of electricity price increases, but the trend of electricity price increases is obvious. Currently, the unit price of one-year electricity package for residents in the German market has risen to about 0.7 euros/kwh.
The high cost of electricity has stimulated the demand of residents to achieve energy independence and save electricity bills by installing household photovoltaic + energy storage systems. Calculate the installed capacity of distributed photovoltaics based on the number of households, consider the penetration rate of household energy storage to obtain the number of installed household energy storage, and assume the average installed capacity per household to obtain the installed capacity of household energy storage in the world and in various markets. It is estimated that the global household energy storage capacity space will reach 57.66GWh in 2025, and the compound growth rate from 2021 to 2025 will be 91%.
Among them, the European market is the largest, with a new installed capacity of 41.09GWh in 2025, a compound growth rate of 112%; the US market will increase its installed capacity by 7.90GWh in 2025, with a compound growth rate of 71%. The household energy storage track has been called the golden track by the industry. The core driving force for the rapid growth of household energy storage comes from the fact that household energy storage can improve the efficiency of self-generated electricity and reduce economic costs.
Driven by global energy inflation and geopolitical conflicts in some regions, global household energy storage has pressed the fast-forward button for development. Driven by the high boom in European household storage, many lithium battery companies in the world have poured into the household energy storage industry, and some companies have fully benefited from the rise of the household energy storage industry. Those who have benefited the most are enterprises that have entered into household energy storage systems, batteries, and inverters earlier, and have achieved geometric growth in performance.
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