Market analysts expect a tenfold increase in the market for small solar power storage systems over the next three years. In the same period, they expect the hurdles preventing the integration of power storage into private photovoltaic systems to be overcome.
The global market for small rooftop photovoltaic systems coupled with power storage systems is expected to increase tenfold over the next three years. That, at any rate, is the prognosis of the market analysts at IHS. To put it in concrete terms, on a global scale the analysts expect more than 900 MW of solar power plants with integrated electricity storage to be installed in residential buildings by the year 2018.
Currently, expansion in this segment is 90 MW worldwide. Market researchers attribute this development to the growing attractiveness of self-consumption. Continued rises in electricity costs will make coupling PV systems with electricity storage attractive more quickly than expected. The analysts expect to see a drastic rise in the number of homeowners who want to break their dependence on electricity providers and thus rising electricity costs.
In addition to the growing consumer interest, new incentives have been introduced not only in Germany but also in a number of other countries. For instance, upper Austria recently launched an initiative to increase the attractiveness of electricity storage systems combined with PV plants in private households. The incentives program offers operators of such systems €800 per kWh of nominal storage capacity for household systems with a maximum of 50 kW.
To qualify for the program, the PV systems must be connected to the grid and designed for self consumption. System operators who receive feed-in tariffs do not qualify for the storage incentive. After all, power storage technologies for photovoltaic systems are designed to significantly increase the amount of electricity users generate with their own PV arrays. In addition, the new storage systems must be equipped with an emergency power function or at least designed so that such a function can be retrofitted quickly and easily.
The desire for independence drives the storage market
Homeowners’ desire for greater independence combined with a wide range of incentives have awakened PV plant operators to the advantages of integrating a power storage system. Up to now, however, the market has faced a number of hurdles, according to the analysts at IHS. One of those hurdles has been limited growth in the photovoltaics market itself.
“The Outlook for the development of the domestic rooftop market, where power storage plays a significant role, has faded significantly over the past few years,” explains Sam Wilkinson, an analyst at IHS who was responsible for the storage market. He attributes this poor prognosis mainly to the roll-back of government incentive efforts. “Concretely, IHS has slashed its 2014 to 2017 estimates by half for private rooftop PV systems in Italy, Germany and the United Kingdom – three major markets,” says Wilkinson.
He sees another hurdle in the in the still-high investment cost of power storage systems. Added to that is the cost of the power electronics necessary to integrate the battery storage system into the photovoltaic system. “Although the average price of lithium-ion batteries, which make up most of the private power storage market, will drop by 20 percent this year, price is still the main obstacle for the industry,” Wilkinson explains.
The result is that the profitable business models for storage in combination with PV systems are still a rough going, and there are just a couple of small niche markets where the incentives and strong consumer interest have stimulated the market to a degree. “In situations where there are financial incentives for integration of electricity storage into private photovoltaic systems, the business models depend very heavily on a number of variables, such as the level of self consumption and the development of electricity prices for private customers over the next 20 years,” says the IHS expert. “The impossibility of predicting these variables with any accuracy and the great difficulty of estimating them makes an investment in solar power storage systems relatively uncertain and is an obstacle to consumer demand for small power storage systems.”
The analysts expect, however, that these problems will be overshadowed next year. IHS estimates that lithium-Ion based storage systems will come down another 15% in 2015 and that the market for private rooftop systems will return to growth over the next three years. These factors are expected to drive the market for small-scale power storage systems. The analysts expect a growth rate of 90% in 2015. After that, self-consumption will be the key market driver. In many cases consumer prices for electricity will rise compared to self-generated solar power, thus making a PV system more attractive.
If the cost of solar power storage systems fall as well, it will become even more attractive for customers to install power storage systems and use a large part of the power they generate themselves rather than feed it into the grid. “The three key variables on which it economic feasibility of electricity storage systems depend are feed-in tariffs for solar power, the cost of drawing electricity from the grid, and the cost of the storage products,” says Wilkinson.
All these variables are heading in the right direction. Although the high cost of batteries in Germany makes PV systems without storage more economical than systems with an integrated storage unit, IHS expects that each one of these three key parameters will develop in the direction and to the extent that this situation will turn around by 2016.
The analysts see the three biggest markets for small home power storage systems emerging in Italy, Germany, the United Kingdom and Australia. These four countries combined will comprise 40% of the total global market in this segment by 2018. IHS also expects the market to get a boost from retrofitted power storage systems. These countries will make up only some 20% of the global market for private photovoltaic systems in 2018 even though they are responsible for just 20% of total added PV capacity worldwide.
Japan will be the biggest market
Japan will be the biggest market for electricity storage systems. There, the market researchers expect 200 MW of private solar power storage systems to be installed in 2018. This estimate is astounding considering that feed in tariffs in Japan are very high and thus people have little incentive to consume their own power. However, the shortage of electricity in Japan has motivated the government to provide incentives for the installation of power storage systems. Further factors are sporadic power outages and major fluctuations in intraday consumer electricity prices which despite the high feed-in tariffs make integrating a power storage system attractive.
In North America, on the other hand, emergency backup power is the only argument for installing the power storage system. That will keep the storage market there relatively small, despite the expectation that North America will be the largest market for private photovoltaic systems in 2018. IHS expects North America to comprise just 5% of the global market for small-scale solar power storage systems.
Source: Renewables International. Reproduced with permission.